Case Study
Factoring in the restructuring -
Mechanik AG
Mechanik AG, based in the Mittelland region, is a typical Swiss SME with around 40 employees and an annual turnover in the high single-digit million range. The sudden changes in the economic environment hit the SME hard.
How factoring provides the necessary liquidity during the restructuringphase
In 2011, the Swiss franc lost over 20 per cent of its value against the euro within a short period of time. Despite the intervention of the Swiss National Bank (SNB) and the introduction of a minimum exchange rate, Swiss products became significantly more expensive in other European countries. In Switzerland, the export-oriented machinery, electronics and metal industry (MEM), which included Mechanik AG – a company specialising in the custom manufacture of mechanical-electrical assemblies and small series production in metal – was particularly hard hit.
Orders from important major customers failed to materialise. This led to a continuous decline in sales from 2013 onwards. At the same time, ever-increasing losses piled up, ultimately forcing the company to go into debt restructuring moratorium in 2017. A well-known corporate consultancy from Zurich stepped in as administrator. Taking into account the diverse interests of the various stakeholder groups, the consultancy drew up a reorganisation concept that would realign Mechanik AG and make it attractive to new investors. A sustainable solution had to be found for financing the restructuring phase in order to quickly eliminate liquidity bottlenecks and ensure a constant flow of cash.
More liquidity quickly and easily
The administrator proposed a factoring solution for this purpose. In the case of financing via factoring, the accounts receivable serve as collateral for the financial institution. This makes it possible to implement factoring even in financial emergencies where bank financing is out of the question. The managing director of Mechanik AG recalls: “We decided in favour of a factoring solution from A.B.S. Factoring because they provided us with a viable financing solution within a very short time and worked out a solution tailored to the situation with our house bank and the other lenders. We received the first payment just one week after contacting them.”
The turnaround succeeds
The quick and uncomplicated support of A.B.S. Factoring AG helped Mechanik AG to achieve the turnaround. “Our experience of working with A.B.S. Factoring AG has been very positive. The team is service-orientated, friendly and responds to all special requests,” the head of the finance department at Mechanik AG tells us. Even after the restructuring phase, the company continues to benefit from the many advantages of financing through factoring. Thanks to the immediate advance payment of outstanding accounts receivable, Mechanik AG can plan its liquidity as required and make purchases for new orders at any time. This allows the company to capitalise on growth opportunities as they arise.
In addition, full-service factoring also relieves the company’s internal administration by outsourcing debtor management. “A.B.S. Factoring AG’s professional and consistent dunning process is particularly helpful when dealing with difficult debtors,” explains the head of the finance department.
The new corporate strategy is paying off for Mechanik AG. The turnaround was successfully completed in the last financial year. Thanks to rapid support and flexible financing through factoring, the company is back on the road to success and is already pursuing its next ambitious goals. “We want to continue to grow and develop our company into the leading SME in our canton,” announces the Managing Director.
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