Transactions Blog

Up until 31 December 2008, the statute of limitations for social security purposes has been set at 5 years. As a result, in case of a reclassification of benefits into remuneration and/or in case of a reclassification of a self-employed collaboration into an employment agreement, the company cost could increase significantly, also taking the interest rate and surcharges into consideration.

As of 1 January 2009, this statute of limitations for social security purposes will be reduced to 3 years. Nevertheless, it should be noted that

-         this reduction of the statute of limitations only applies for social security purposes and not for employment law purposes, where the statute of limitations remains unchanged.

-         In case of fraud, the statute of limitations will be increased to 7 years;

As a result, the liabilities that could arise from a reclassification for social security purposes will generally be reduced, compared to the years before 2009.  Only in case of fraud a higher liability may arise.  Such fraud should then however be proven by the social security authorities.

Mergers, acquisitions, disposals – even in good times it can be hard to realise the full value of a transaction. A tough economic climate typically triggers a host of problems, including underperformance, declining earnings, liquidity shortfalls and cash flow blockages. When companies exhibit symptoms of distress, early detection and swift, decisive action are the keys to restoring performance.

In the webcast below PwC’ Transactions Leader, Jan Muyldermans, explains how our business recovery services and independent business review can help you get the most out of your operations.

Banks and credit insurers are seeking ways to reduce credit exposure and liquidity risks, by cutting back on existing lines of credit and making new issuances much tighter and more expensive.

The old ‘cash is king’ has never been more true. Those management teams able to identify and drive excess cash out of the business will be in a much stronger position. Also during the due diligence phase of a transaction, this element can be considered to be of increased importance.

Companies often look to generate cash through cutting dividends, deferring suppliers and reducing headcount, but these actions can often have a negative impact. A study of the underlying levers which drive the business cash flow and proper understanding beyond the more obvious can allow other quick wins and more sustainable improvements.

Longer term solutions should be axed around putting incentives in place, having appropriate management reporting and concentrating / restricting access to cash.

Some examples of measures include:

• robust cash forecasting combined with sensitivity planning and accurate reporting
• identifying and releasing trapped cash
• cash pooling
• accurate and timely billing of clients
• reducing supplier base to negotiate better terms
• assessing the right level of stock and increasing inventory turns / reducing lead times
• disposal of non-core assets, etc

One should clearly also not forget the saving and cash potential from proper legal/fiscal planning (legal simplification of the group structure and optimal use of tax losses and other tax credits and incentives within the group through reorganisations, managing of direct and indirect tax payments, optimization of VAT deductions, etc).