3 BUSINESS ACTIONS TO DEAL WITH FINANCIAL DIFFICULTIES IN LATIN AMERICA
Projections of the effects of the new coronavirus in Latin America consider that the economic contraction will be severe and long-term consequences on social inequality will be developed.
“Our region is bearing the worst economic and health impact worldwide due to COVID-19,” said World Bank Vice-President Carlos Felipe Jaramillo, during the presentation of the latest report on the economic effects of the pandemic.
The World Bank expects Latin America to decline 7.9% in average Gross Domestic Product (GDP). The economic recovery is expected to start during next year 2021 with a slight growth of 4%.
Companies that want to be part of this economic rebound need to reassess their financial condition now and transform their businesses.
At Credit Report we share these three basic points so that Latin American import and export companies can face up to the financial difficulties and take advantage of the opportunities that arise in the midst of this situation.
1. Make decisions on time
One of the most common mistakes that companies make during the economic recession, as happened in the 2009 crisis, is to postpone key decisions on operations.
When economic difficulties are faced, it is best to thoroughly assess the problem and understand the viable options. However, the management and administrative staff cannot stop at diagnosis only but it has to move forward with reforms and adjustments that are needed to improve the company’s conditions.
2. Advance operational changes
When the long weeks of social insolation were imposed around Latin America, the food and pharmaceutical sectors were forced to reassess their operation to ensure the safety of their employees and also to respond to the production and delivery schedules agreed in advance.
These adaptation measures were taken mainly for the wake of the emergency due to COVID-19. Now, seven months into the pandemic, everything indicates the decisive solution with the arrival of a vaccine is still a long way off, the best action is to reassess the operating schemes in a way that ensures resource efficiency to improve the company’s productivity.
3. Face negotiations with creditors
Moody’s projects that corporate default rates will range from 6.8% to 10.2% in Latin America by the end of the year. This means that many companies in the international trade sector will face liquidity and insolvency problems with their creditors.
Specifying the scale of the financial problem as soon as possible is only part of the task. Those organisations that act quickly and decisively will have a competitive advantage in overcoming the unique obstacles posed by the economic crisis related to the new coronavirus.
If the commercial company anticipates that it may default in the short or medium term, then beginning negotiations with creditors as soon as possible is the best option. Private agreements on good terms can safeguard the company and obtain better payment terms.
At Credit Report we are experts in debt collection services within local and foreign markets. We are at the disposal of commercial companies that seek private negotiations to obtain the best payment terms.
Our services not only include direct contact with the debtor company but also a detailed report with specific guidelines for each case.
This collection management between companies works under the “no collect, no fee” model. This ensures our commitment to cash recovery; a task can make a significant financial difference in the midst of the recession caused by the COVID-19 pandemic.