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Preface

Since the outbreak of COVID-19 in 2019, novel coronavirus has not disappeared. With the "lying flat" in the world, new varieties of newcrown virus continue to appear in the transmission and repeatedly erupt in various countries. This has led to the continuous cycle of social life in the process of suspension and recovery, and the inability to achieve long-term stable and sustainable development. Countless enterprises and individuals are facing unprecedented challenges and pressures, and even die out completely.

With the "normalization" of China's epidemic prevention measures, it means that the spread of the epidemic in China can not be ended for the time being, and may be repeated for a long time. Under such circumstances, how to survive the "severe winter" and survive is a subject that every enterprise must face and think about. Capital is the "lifeline" for the survival and development of an enterprise. This paper will briefly analyze the importance of capital, the difficulties faced by enterprises in withdrawing funds during the epidemic, and suggestions for enterprises to deal with the epidemic, hoping to provide some valuable ideas for enterprises and relevant personnel who strive to survive in the epidemic.

1、 Importance of funds

For an enterprise, the most important foundation for business survival is capital. If the capital is sufficient and can flow normally, the enterprise will survive; If the capital is insufficient to maintain the operating cost, the enterprise may face insolvency or even bankruptcy. During the epidemic period, except for the enterprises engaged in epidemic prevention related businesses, most of the other enterprises suffered obvious blows. For example, due to the prevention and control measures, the production and operation business could not be carried out, the logistics stagnated, the personnel could not work normally, the counterparties were unable to pay, the financial institutions could not handle credit, etc. in addition, most enterprises still faced the problems of personnel wages, office space rent, loan interest The expenses of taxes and other costs have led to a sharp decline in the income and capital of enterprises, and many enterprises have serious difficulties in capital turnover.

(picture from the network)

The operating income of an enterprise is usually accompanied by the cost input in the early stage (such as equipment, labor, technology, etc.), otherwise many business projects will not be carried out, and there is no way to talk about the income in the later stage. If the fund is insufficient for a long time, the business condition of the enterprise is likely to fall into a vicious circle and eventually close down due to the breakage of the fund chain and the inability to make ends meet. However, if the enterprise has normal circulating capital, it can survive in the poor living environment, and even take the opportunity to "bottom" some assets when the capital is sufficient, so as to realize "overtaking in the opposite direction". Therefore, to ensure the capital flow of enterprises is to ensure the "lifeline" of enterprises.

2、 Difficulties faced by enterprises in withdrawing funds during the epidemic

Withdrawal of funds refers to the phenomenon that the funds return to the investors after a period of operation after the initial investment in business activities. In the process of capital operation, the capital may be transformed into various forms of assets, and eventually return in the form of capital. For example, enterprises in the service industry invest in the early stage to hire service personnel. After the service personnel provide services, they receive the funds and return to the enterprise; When a financial institution provides loans to others and recovers the loans when they are due, they all belong to fund withdrawal.

Under the influence of the COVID-19, many enterprises have suffered a great blow, their funds have been severely tightened, and even face the risk of capital flow disruption. Therefore, a large number of violations have occurred. For example, the supplier's customers default on payment for goods, the service enterprise's customers default on service fees, the financial institution's customers default on loans, and the lessor's customers default on rent... There are also many enterprises that have directly closed down and are unable to recover their debts, and some debtors even evade their debts by transferring their property maliciously.

The above phenomena make the situation of the supplier enterprises that are already in trouble due to the epidemic worse. Generally, the longer the debt is in arrears, the more difficult it is to recover the debt - some debtors are unable to pay off several debts, some debtors have more time to transfer their property, and some people's financial situation is deteriorating. In the end, creditors are facing the outcome of "bad debts".

3、 Enterprise response suggestions

In this case, how enterprises should face the risk of capital withdrawal is a very noteworthy issue. The author suggests that risk prevention should be carried out in the following three stages:

1. Before transaction

(1) Establish a sound project review mechanism, investigate and evaluate the basic information, credit, capacity, debt situation, etc. of the participants, carefully determine the participants, and avoid transactions with subjects without trading capacity, so as to input unrecoverable costs.

(2) Set up effective guarantee measures for creditor's rights, such as traditional forms of guarantee such as mortgage, pledge and guarantee, or other non-traditional forms of guarantee recognized by law (transfer guarantee, etc.).

(3) Sign a contract with complete terms, predict and prevent possible risks through contract terms, and can be used as a strong basis for claiming rights when risks occur.

(4) An effective address for service shall be agreed, and the identity information of the counterparty (especially the copy of the ID card of a natural person) shall be obtained and kept, so as to avoid the failure to claim rights or delay the best opportunity once the judicial process is entered in the later stage.

2. Transaction in progress

(1) Strengthen the supervision and attention to the project, urge the counterparty to perform the contractual obligations as agreed, and do not delay at will.

(2) If both parties agree to change the transaction, they shall timely sign a formal supplementary agreement, or sign a separate contract, rather than just an oral agreement.

(3) Keep communication, and pay attention to keep the transaction records and communication vouchers of both parties, so that the transaction facts can be restored to the greatest extent in case of any dispute.

(4) Verify the identity and authorization of the other party to the receiver, ensure that the counterpart can conduct specific transactions on behalf of the other party, ensure that their behaviors are effective for the counterparty, and avoid the counterparty from denying all or part of their counterpart's behaviors.

3. After the risk occurs

(1) If the other party fails to perform its obligations on time, it shall actively urge the performance and pay attention to leaving traces. It is better to send the urging information in written form and retain the service voucher to remind and warn the counterparty, which can also be used as evidence for claiming rights in the future, and can also interrupt the limitation of action.

(2) After the other party breaches the contract, it shall immediately make full preparations, sort out and analyze relevant materials, and continuously collect evidence and information in favor of itself in the later communication, so as to be ready to file a lawsuit at any time.

(3) If the other party still fails to perform the agreement after being urged, it shall timely determine the litigation claim and the court with jurisdiction, file a lawsuit and apply for property preservation as soon as possible, and apply for entering the execution procedure as soon as possible after obtaining the winning judgment, so as to avoid the property being executed by other creditors who sued earlier due to the large amount of the other party's debt, or the other party transferring property to avoid debt.

Conclusion

The above are the author's suggestions on how to deal with the risk of capital withdrawal during the COVID-19. I hope that they can provide you with effective ideas. I also hope that each enterprise can actively face the challenges brought by the epidemic, explore the most suitable business development model, and spend a difficult time safely.