Isolation puts companies on alert for cutting the payment chain

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The lack of circulation of checks, cash and the closure of activities can generate a massive bankruptcy of shops and industrial establishments

In the first hours of the first day of compulsory isolation established by the Government to combat the coronavirus, the Palermo Hollywood neighborhood could be renamed Palermo Desolado. The gastronomic area par excellence of the City of Buenos Aires has no life, it offers a panorama of closed shops, without staff or people walking the streets and, obviously, with the total absence of foreign tourists, who in recent years have become the clients par excellence of all the bars and restaurants of this traditional Buenos Aires area.

The postcard, typical of these days in which isolation is almost the only vaccine against the spread of the virus that came to disrupt and put the lives of all Argentines at risk, is repeated in other areas of the country. Premises with low blinds, banks with almost no operations, employees with their jobs at risk mark the strong commercial paralysis that the quarantine is leaving as one of its collateral and unintended consequences.

In this context, the main concern of businessmen, after which coronavirus naturally leaves for health, is the uncertainty generated by the operation of the payment chain.
The gravity is such that the lack of activity in a large number of sectors and the obvious drop in demand jeopardizes the commercial future of many sectors, today with almost no income.

Trying to contemplate this scenario, the government came out a few days ago to announce a strong package of assistance measures to sectors potentially at commercial risk due to the severity of the pandemic. Also to use the Central Bank (BCRA) to minimize the factors of this economic black down of the country. From the entity they explained to iProfessional several of the decisions already adopted that were published in two circulars published during the early hours of this day on Friday, March 20.

They ensure that these are rules aimed precisely at guaranteeing the payment chain for both individuals and companies. An example is the operation of the Electronic Payment Mechanism (MEP), through which Anses and Pami paid salaries to providers and assets to retirees and holders of social plans such as the AUH.

Also the digital platform SIOPEL to channel payments and linked collections of imports and exports in foreign currency for the wholesale exchange movement. As for the checks, since they do not have a camera, they will only begin to be credited once the quarantine has ended, while the operation of the banks guarantees the presence of employees in the treasuries and the distribution of the loading and recharging of the ATMs with money that the entities are receiving.

An example was given on this day, when YPF deposited the proceeds at its service stations at Banco Nación, which in turn will dump those funds back into the system to guarantee cash. In addition, the Central has just agreed with the Argentine Chamber of Medium-Sized Companies (CAME) the extension of shops that will be able to offer money to customers such as pharmacies, wholesalers, shopping centers and grand es supermarket chains and service stations.

As for the measures to alleviate situations in SMEs, a credit line was approved that uses the leliqs that now banks will not be able to fully dispose of, since 10% of these bills will be used to finance small and medium-sized companies at a rate of the 24% that if they cover lower the reserves and the minimum cash.

“Every effort is made to cover this situation of a pandemic of such magnitude, preserving the course set by the Government and with measures that are analyzed day by day from the teaching that leaves us with the most pressing problems,” the sources argue. of the Central. Although it is a battery of rules that allow improving the outlook, in the business sector, concern is also prevalent regarding a possible break in the payment chain and that is why more measures are demanded.

For example, from the Argentine Chamber of Medium-Sized Companies (CAME), they ask for a battery of actions complementary to the measures already taken by the Government to avoid a breakdown in the economy, so that the sector does not fall into a collapse after 14 days of sanitary isolation.

The Argentine Chamber of Commerce and Services (CAME) also warned of “the very difficult situation the sector is going through” due to the economic impact that the spread of the virus will have in the country. The business entity sent a letter to the Government informing you about the “very serious situation facing many companies in the sector” and referring to the “collapse of demand and the multiple restrictions that have been imposed (closure of premises, limitations to its operation , restrictions on transit between provinces) “as the measures that have put in a very difficult situation.

They anticipate that the commerce sector is not in a position to meet its most basic obligations, such as paying salaries to its staff, paying rent and honoring its credits.
A claim similar to that already made by the medium and long distance bus companies, with their frequencies suspended and canceled until further notice and which led them to claim the economic emergency in order to obtain certain benefits or help from the national State.

The concerns are about how to face bank debts, the payment of taxes and the fulfillment of labor obligations in days of isolation.
Important businessmen consulted by iProfessional They coincided in the doubts that this parate generates and warned that once the health panorama clears it will be time to analyze a larger aid package than that announced by the Ministers of Productive Development and Economy, Matías Kulfas and Martín Guzmán, respectively .

Exempting affected companies from paying employer, monotax and self-employed contributions for three months is one of the proposals that came from CAME. Others add the need to postpone by three months the fulfillment of financial debts and the cancellation of interest in alleged cases of delay, in addition to the launch of credits without interest to pay wages and extend the tax moratorium and leave without effect Earnings, VAT and employer contributions.

In this sense, companies in the energy sector are concerned about their income. In a framework of values ​​already frozen by government decision, they fear that the coronavirus will deepen their already complicated situation.
This is evidenced in a statement released by the Association of Electric Power Distributors of the Argentine Republic (ADEERA) in which, beyond reaffirming the commitment to provide the best service in the context of the health emergency, they ask to support the chain of payments .

“It is essential to maintain the level of collection in order to have working capital to meet the demand of the moment,” says the document in which, bypassed, they ask users of the service to continue paying their consumption.

“They provide the resources that make possible the correct electricity supply and at the same time, through the taxes included in the invoices, they contribute with the State to solve part of the necessary measures to go through the serious emergency situation”, the electrical distributors detail. ADEERA partners.

Carlos García, the CEO of Garbarino, the largest household electrical appliance chain in Argentina, expressed the same line. In addition to taking the lead in negotiations to save the company from bankruptcy and agree to pay its debt with banks and suppliers, the businessman must now add concern about the current context.

“In general, 14 days without sales is too much, so I suppose that everything can be negotiated, having the longest terms and super accessible credits as the main tools for everything to normalize,” says the executive.

Horacio Moschetto, secretary of the Shoe Chamber, reacts in the same way, for whom his sector today does not generate sales and has no income “neither to pay wages nor commitments to suppliers, with rejected checks.”

In the food business there are also doubts about the future. Sources in this industry were concerned and understand that the breakdown of the payment chain “is a very possible scenario if this extends for a few more weeks.”

They warn that SMEs generally have no rest, although they admit that subsidized loans of 24% “can help”. Anyway, they request to advance with some direct relief measure such as postponement or forgiveness of taxes to companies that suffer the effects of the stoppage.

Similarly, in one of the largest dairy companies, they claim to have problems with the circulation of money to sustain operations, more than anything due to the situations that are occurring with the check system and cash.

They assure that at the moment checks cannot be deposited because the banks do not work and there is no management. “This is paralyzing our activity,” they warn in the company, in which they explain that since they cannot have funds in their account, they cannot pay by transfer. “The banks do not manage because there is no one to do the internal operation of the check,” they add.

As an example, they say that the large supermarket chains pay 45 days but that from the 30th the money can be discounted, but since there is no financial management it is impossible to obtain funds in this way.

In the case of cash, companies warn that the shortage creates obstacles in direct sales, in those of small businesses, warehouses and local stores, for example. “They cannot load the funds directly into an ATM, therefore they require physical attention that is not available, which also delays the operation and what it does is allow companies to finance mechanisms based on this negative scenario for us,” he warns. the top executive of this company.

Another major food manufacturer points out that the consequences in the payment chain will depend on the actions taken by the Government and the banks to assist with financing the companies that carry out the essential activities included in the decree of necessity and urgency.

While from the real estate and real estate sector, they assume that the entire chain will suffer, but avoid commenting on the dimension that the problem will reach. “You cannot even extrapolate experiences from other countries affected by the particularities of our economy,” they add.

In any case, they admit that in the real estate market it will accentuate the recession and will generate renegotiations in current rental contracts, both commercial and residential.
In other companies they question the cut of the clearing of checks when considering that it does not make sense and understand that the banks are a public service.

And in some they highlight the decision to maintain interbanking to be able to offset all electronic transfers, the treasures of active banks, Leliqs tenders and the exchange market despite the fact that the banks’ branches do not open to the public, including retirees. There is also the possibility that next week they will attend but for a very limited public and with far fewer employees, although the opposition of the union could destroy this opportunity.

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