Rzeszow University of Technology,
In Poland, the first cases of COVID-19 took place in March 2020. The reaction of the Polish government was very resolute, a lockdown was introduced throughout the country. This decision resulted mainly in the lack of complete information about the COVID-19 virus, it can also be said that it was not fully thought out. Schools and businesses were quickly closed, limits were introduced in grocery stores, which resulted in long lines in front of them. Life in Poland almost froze, electricity consumption decreased, traffic on the streets decreased, air quality in Poland improved. All this was the result of the detection of several cases in a 40- million country.
The COVID-19 pandemic has clearly exposed the poor state of the Polish health service. There were places where there was a shortage of staff in hospitals, there were no masks, and most of all the search for respirators began. The Polish government dealt with the shortage of supplies fairly quickly and efficiently, and medical equipment was quickly obtained. Respirators came to Poland from various sources. One of the suppliers was even an arms dealer, who to this day has not made deliveries for which, of course, millions had previously been paid. During the presidential election, the pandemic unexpectedly subsided, and a few days before the elections, the prime minister loudly encouraged people not to be afraid of the virus and go to the elections. The elections beat the COVID-19 pandemic, which of course later returned with greater force. The situation repeated, shops, schools and various service points were closed again, then some of them were reopened. This situation continues to this day.
From the point of view of SMEs, it was a serious mistake to communicate information by the Polish government about industry closures rather late. Very often, announcements appeared only a day or hours before closing. The owners had no room for reaction. They were left with a product that they had to throw away or a service that they could not provide and had previously incurred the costs of preparing the service.
The Polish government has generously offered support in the form of anti-crisis shields for industries that have suffered, i.e. for those whose activities have been closed or limited. Some SMEs praised this kind of aid very much, others complained that it did not help to save them and were heavily delayed. Surely state-owned enterprises could not complain about support. A prime example were mines and miners who were better treated compared to SMEs employees.
The situation for SMEs at the time of COVID-19 and the lockdowns being introduced were bad. Of course, a lot depended on the industry in which the SMEs operated. To this day, the companies that provide the services operate with limitations, or are completely closed. Therefore, it is difficult to assess what management strategies can be used by the owners of gyms, fitness clubs, since they are closed all the time. On the other hand, hairdressing salons at the time of opening have clients beyond their means, but they cannot serve them because they often dismissed employees during the early closure and now they are not sure whether to hire them or the situation will not happen again. Hotels and restaurants are collapsing, and take-out services do not always support entrepreneurs.
Strategies for managing financial security in SMEs operating at that time can be described as highly conservative. From the point of view of financial security, one should focus on the analysis of inventory management, short-term receivables or short-term liabilities. In SMEs, at the very beginning of the pandemic, most enterprises tried to stock up at the highest possible level (construction industry). These were stockpiling activities with a large safety margin in the event of supply interruptions. It was a good move because virtually every industry has experienced outages or delays. Supply interruptions, shortages of goods in the states naturally caused an increase in the prices of goods and materials. So companies with high inventories have doubled benefits because they had numerous buyers and high prices. In the case of sales and customer receivables management, there were no problems with granting discounts. The sellers did not fight for contractors and did not have to support themselves with discounts, they did not grant them. The sellers as much as possible wanted to sell for cash or with a very short payment term. The situation for the management of liabilities to suppliers was the same as for the management of short-term receivables.
On the basis of these three elements, it should be stated that in SMEs the financial security management policy was based mainly on the collection of appropriate inventories, which allowed building appropriate strategies for managing receivables and liabilities. When assessing the financial liquidity management strategies, it is worth noting that there was a change in the structure of current assets where receivables from recipients were displaced by cash in hand or in a bank account. That actually improved the financial liquidity.
When analyzing the situation in Poland, it can be firmly stated that the groups that lost the least during lockdown were employees of state-owned enterprises and politicians. SMEs operating in the service sector lost the most.
Today, the public mood in Poland is a great opportunity to improve the situation of SMEs and their rapid development. The society is fed up with restrictions and if the restrictions imposed by the state are loosened, consumption will certainly increase, which will revive the service and commercial sector, which will allow SMEs to increase revenues and finally achieve the desired profits.
Expert article 2971
To receive the Baltic Rim Economies review free of charge, you may register to the mailing list.
The review is published 4-6 times a year.