Advice for companies in Israel during the Corona crisis

Advice for companies in Israel during the Corona crisis

Do you have to lay people off or put them on unpaid leave? In this article we give advice to companies in Israel on how to overcome the Coronavirus crisis. The global crisis is hitting masses of workers and companies. Many companies, especially small ones, are already on the verge of collapse. The question many businesses are asking themselves: How can I keep going, or when should I consider putting my company out of business? Thousands of workers are also being laid off, sent on vacation (paid leave) or made redundant. So what do you do? In this Q&A article, we give advice to businesses in Israel on overcoming the Coronavirus crisis.

Questions and answers

1 - Companies in the tourism, restaurants & leisure sector

Q: I have a tourism business with several employees. Since revenues have dropped, this month I'll have to put all my employees on unpaid leave because I have no way of paying their salaries. Probably in a couple of months, the situation will return to normal in terms of viruses, but by then, the company will be on the verge of bankruptcy. How can I avoid a collapse? A: If it's a business that can't operate at the moment, such as tourism, hotels, restaurants and other leisure businesses. An emergency plan should be implemented quickly to avoid its collapse. Agreements can be reached with banks, suppliers and the authorities on the postponement or staggering of expenditure. Everyone understands that the current situation is unconventional and needs to be taken into account in order to facilitate the conduct of business. At the same time, consider streamlining the business while reducing expenses in various areas. In these difficult times, it's highly advisable to reorganize, rationalize and analyze the way your business operates. At the end of this article, we'll be giving advice on how companies in Israel can do just that.

2 - Employee questions

Q: I work for a large company and have 3 options:
  • dismissal,
  • 40% pay cut for two months,
  • unpaid leave.
What's the best choice for me? A: It depends on a number of aspects concerning the employee, his or her seniority, agreements and more. Even if you are entitled to unemployment benefit, redundancy is the worst option, as the job market is likely to be saturated with unemployed people in the coming year. It might be better to keep your job. 60% of your salary is safe money and an excellent way to keep your job. Bear in mind that if you're unemployed, you'll receive 70% of your salary. up to the statutory ceiling. The best way to keep this job seems to be to accept a pay cut if your boss offers it.

3 - When should a company turn to a procedural freeze/liquidation?

Going to court is only one solution. There are other options that business owners may not have considered, such as asking the bank to defer loan payments, creating an internal turnaround plan, offering promotions to its customers, expanding its product range, creating and developing internet activity, etc. It's a difficult time for everyone. For you, of course, but for your competitors too. Take advantage of this period to gain market share and diversify your offerings. Your company deserves your full attention to get through this difficult period. If you're in Bidoud, analyze your market sector, carry out a SWOT study on your company so that you can bounce back even better when this crisis is behind us, if D... wants.

4 - Taking out a bank loan

Q: The company has run out of cash because of the CoronaVirus crisis in Israel. Who should I ask for a loan or assistance, and what should I look out for? A: Firstly, don't be tempted to borrow from dubious entities under unreasonable trading conditions. Secondly, the Israeli government has decided to establish a state-guaranteed loan. You could consider using this service. Thirdly, credit can be obtained from banks or agencies. This can be another source of financing under conditions that will support the company through a difficult period. Tip: Don't rush into taking out a loan. Keep in mind that a loan must always be repaid. It's not a grant. Analyze your needs and seek specialist advice.

5 - Rental contract

Q: I have a rental agreement for the company's offices and I don't think I can pay my rent. What should I do? A: A distinction needs to be made between the short term and the long term, and decisions made accordingly. If the rental is required for the short term, it's not worth breaking your agreement. However, a long-term lease that is not serving the company and is a burden on it needs to be analyzed. Quick action must be taken to be released from this agreement, a matter that involves a legal battle. Call in your lawyer. If you don't have one, contact us. We'll recommend the services of reputable French-speaking service providers.

6- How did I get here? ?

Q: Many (too many) companies in Israel find themselves in precarious cash flow and working capital conditions. How did these companies get into this situation? How can we avoid finding ourselves in this situation in the future? A: Too often, business owners spend everything the company has earned. Some even spend the company's profits at the expense of the income tax they have to pay. The Israeli tax authorities even had to get involved in 2017 to curb this kind of abuse. The problem stems primarily from the fact that we live in a consumer society that too often encourages people to spend even on things they don't need. We can't change the world, but we have to think about our future and the future of our descendants. A virus, new competition in our sector, our staff leaving, etc. can ruin years of work. The wheel turns, and sometimes it turns too fast, without warning. Tips for businesses in Israel to think about tomorrow:
  1. Set a budget based on your needs, not your income.
  2. Stay within budget.
  3. Think about investing the company's profits:
    1. Real estate investments: if your company invests in real estate, you avoid having to distribute these funds and therefore pay income tax too soon. This will also be recognized as an expense for your company via depreciation! Click here for more information on real estate investments.
    2. Investments in funds (keren Ichtalmout, savings, pensions).
  4. Plan for adequate and substantial working capital, so that you don't always find yourself in a tight spot. As a matter of principle, if a company is to survive over the long term, it must never find itself at the limit of its maximum debt ratio. Experience has shown that such a company cannot be sustained over the long term. The business owner will have to modulate his lifestyle for a certain period if he wants to comply. Otherwise, unfortunately, the taxman, the banks and the bailiffs will bring you back to reality. As the saying goes, "an informed man is worth two".
  5. Seek advice from organizations or specialists who can help you make the right decisions.
ConclusionYou're the only one who can (and should) make the right decisions. To reassure you, many opportunists are doing excellent business today, even in these times of crisis! Here are a few examples to get you started:
  • Stalled" real estate transactions, where the seller finds himself in a bad position. This represents a real buying opportunity.
  • Forward contracts to take advantage of the euro's rise against the shekel, and secure your future years.
  • Purchase the equipment and supplies you need for the day-to-day running of your business, taking advantage of the "big discounts" offered by your regular suppliers.
We wish all our readers and all the Jewish people good health.



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