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Factoring in restructuring:
Case Study – Mechanik AG

We opted for A.B.S. factoring because we were very quickly provided with a viable financing solution. The A.B.S. Factoring AG team worked together with our principal bank and lenders to create a solution that was tailored to our specific situation.
Mechanik AG



How factoring provides the necessary liquidity during the restructuring phase

In 2011, the Swiss franc lost more than 20 percent of its value against the euro in a short period of time. Despite the intervention of the Swiss National Bank (SNB) and the introduction of a minimum rate, prices of Swiss products rose significantly in other European countries. The export-oriented machinery, electronics and metals industry (MEM), in which Mechanik AG is active, was heavily hit in Switzerland.
Based in the Swiss Plateau, Mechanik AG is a typical Swiss SME with around 40 employees and an annual turnover in the upper single-digit millions. The sudden change in the economic environment severely affected the SME, which specialises in the custom production of mechanical-electrical assemblies and small-batch production using metal. In 2013, orders from bulk buyers dried up and in 2013 turnover went into steady decline. As ever greater losses piled up, the company was forced to go into debt moratorium in 2017, with a reputable business consultant from Zurich engaged as trustee. Taking the diverse interests of the various stakeholders into account, the trustee devised a restructuring plan that would realign Mechanik AG with a view to attracting new investors. A sustainable solution was needed to finance the restructuring phase, in order to eliminate liquidity bottlenecks quickly and ensure a steady flow of cash and cash equivalents.

Fast and easy way to more liquidity

The trustee suggested a factoring solution. Where financing is arranged through factoring, accounts receivable serve as security for the financial institution. This means that factoring can be utilised even in dire financial situations where bank financing is out of the question. As the Managing Director of Mechanik AG recalls, “We opted for A.B.S. Factoring because the company offered us a viable financing solution in a very short time, and devised a solution tailored to our situation with our principal bank and the other lenders. Just one week after making initial contact, we received the first payment.”

A successful turnaround

The fast and straightforward support from A.B.S. Factoring AG helped Mechanik AG to achieve the turnaround. “We experience the collaboration with A.B.S. Factoring AG as very positive. Their team was service-oriented, approachable and sensitive to our particular needs,” says the head of the finance division at Mechanik AG. Even after the restructuring phase, the company has continued to benefit from the many advantages of financing through A.B.S. Factoring. Thanks to the immediate advance of open accounts receivable, Mechanik AG is able to plan liquidity according to need and make purchases relating to new orders when it wishes. In this way, the company can seize opportunities for growth as they present themselves. A.B.S. Full-Service Factoring has also eased the pressure on internal administration thanks to the outsourcing of debtor management. “A.B.S. Factoring AG’s professional and consistent dunning process is especially helpful in the case of difficult debtors,” continues the head of finance.
The new corporate strategy is paying off for Mechanik AG, which successfully completed the turnaround last financial year. Thanks to rapid support and flexible financing through factoring, the company is back on track to succeed and already pursuing ambitious new targets. “We want to continue growing and establish our company as the leading SME in the Canton,” states the Managing Director.

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