Difficult words in financial problems explained

You file your VAT returns and your income or corporate
income tax returns with the Dutch Tax and Customs
Administration.

If you have financial problems with your business, you
can apply for Bbz, financial support for self-employed
professionals, from the municipality where you live.
You can get a loan or benefit.

The Credit Registration Bureau BKR registers all credits
starting from €250 that you use for longer than a month.
This includes business loans for which you are personally
liable. BKR also records your payment history on those
credits. Good payment behaviour can work in your favour
when you are applying for a loan.

Business model: a description of how your business
makes money and how you organise that. 

With the business model canvas, you incorporate nine
building blocks of your business into a single overview. It
helps you focus and gives you opportunities to adjust. 

A special deferral of paying taxes for entrepreneurs
affected by the corona crisis. Since October 2022, the
tax arrears have to be repaid in instalments. 

Cash flow is the difference between the income and
expenses your business has over a given period.

Provides an assessment of your creditworthiness: how
likely are you to repay your loan according to the terms?

This key figure indicates whether you can pay your
current liabilities (current account + creditors) from
the assets you now have (inventory + debtors + liquid
assets). There are several industry current ratio
calculators available online.

The default percentage indicates the probability
that a company will be unable to meet some or all of
its obligations within 12 months. It gives an indication
of risk for financiers who are considering lending to a
company.

A restart: after bankruptcy, you make a new start with
the arts of the business that are still profitable.

Equity is the difference between the debts and assets
of your company. Your equity rises as you earn profits
and falls as you suffer losses.

In the operating budget, you indicate what costs and
revenues you expect in a given period. It shows
whether your business can expect to turn a profit.

A company (or individual) can be declared bankrupt
by the court if the payment obligations can not be met.
Bankrupt literally means you have ceased to make your
payments, whether because you are unwilling or unable
to meet your payment obligations. 

As a business owner, you can file for bankruptcy
yourself, but a creditor can also ask the courts to declare
your business bankrupt if it fails to pay. 

If you are in financial trouble, you can see whether,
after you have paid part of the debt, your creditors will
forgive you the remainder. That way you will no longer
have to pay that part, you will get final discharge for it.

Business owners can be personally liable for business
debts. This applies to eenmanszaken, vofs, and
maatschappen. In a bv, for example, this is not
automatically the case, but if you co-sign for a loan as a
director privately, you also become personally liable
(also referred to as: jointly and severally
liable).

With a direct debit, you give permission to have an
amount debited from your bank account once or
regularly. 

The investment budget can show you which assets
you will need in the coming years and how much money
you will need to that end. There is a difference between
assets that have been in the business for more than a
year (such as premises) and less than a year (such as
stock).

The IOAZ, Income provision for older and partially
disabled self-employed persons is an income
supplement for business owners aged 55 and above
who are retiring. Income is supplemented up to a level
equivalent to what social assistance would bring in. You
apply for this benefit from the municipality where you
live before you quit your business.

For a business loan, the credit limit is the maximum
amount you can dispose of (be in the red for) on your
current account.

Liquidity indicates the extent to which a company can
meet its current payment obligations. If the sum of
current assets (inventory and accounts receivable) and
cash exceeds short-term liabilities, a company is liquid.

The liquidity budget is an overview of your income
and expenses, so you can see how much money you
will have left at the end of a period.You can use this
to check whether you still have enough left to pay
your bills.

How to reach a mutually agreed amicable settlement
with your creditors to pay off your debts. A debt
counsellor can help you with this.

The Belastingdienst imposes an additional assessment 
if you have filed a tax return late or not at all. They
estimate how much VAT you have to pay, and add a
penalty to that amount.

A decline in turnover: the total amount you earn from
selling your company’s products or services goes down.

An employer needs permission to dismiss employees
from the Employee Insurance Agency UWV if they
have to lay off their employees in response to major
problems or changes in the company.

A bridging loan can help you to get through a period
when the business is going through a bit of a financial
downturn.

You have problematic debts, that have grown so high
that you can no longer pay the bills and it is not certain
that your business will survive.

Profitability is a measure of your company’s ability to
turn a profit. Here you compare the profit to the average
total invested capital (equity + debt). 

A rehabilitation loan is a form of debt settlement. You
borrow an amount from a municipal or other credit bank to
pay your other creditors in part or in full with it. You then
repay the credit bank in instalments. 

You owe a creditor money. 

A debtor owes someone else money. 

If you are in debt, debt assistance through a debt
assistance agency can help you resolve problems. You
apply for debt relief at the municipality where you live.

The Wsnp (Debt Restructuring for natural persons Act)
is an arrangement where the court appoints a receiver
to manage your financial affairs and try to pay off
creditors as much as possible. In many cases, you have to
stop your business. In no more than 5 years, you should try
to get as much money as possible available for creditors.

Solvency is the ratio of your equity to your total assets.
The number indicates whether your company can pay
its long-term debts. It is also called buffering capacity. 

The transition payment is the allowance your employee
is entitled to if you do not renew their contract or if you
dismiss them. The amount of that allowance is one-third
of the monthly salary for each year in which the employee
worked.

If you cannot pay the tax on time or at all, you can get
a tax payment deferral (in Dutch). You request it
from the Belastingdienst.

You can apply for a deferral on your VAT return (in Dutch)
if there are special circumstances such as a fire or severe
flooding at your place of business.

The Employee Insurance Agency UWV is a Dutch
government organisation. It deals with insurance for
employees, such as unemployment insurance under the
Unemployment Act (Werkeloosheidswet) and disability
insurance (Wet op de Arbeidsongeschiktheidsverzekering,
WAO). 

Early warning: recognise situations (in Dutch) that could
lead to money problems, so you can head them off in time. 

In your value proposition, you explain why a customer
should choose your company and not a competitor. You
convince the customer to buy the product from you. 

The Court Approval of a Private Composition
(Prevention of Insolvency) Act (WHOA) allows a
business owner to go to court to enforce an agreement
they have with their creditors. This does not require the
consent of all creditors. The law applies to business 
owners who are at risk of bankruptcy but who still have
profitable business activities. 

A Wsnp-administrator under the Dutch Act on Debt
Restructuring for Natural Persons checks whether you
are complying with the rules of the Wsnp.

'Zekerheden' are guarantees in the form of money,
goods (such as inventory), or rights. A loan may involve
providing collateral as surety. Under the terms of security
law, the lender has the right to claim your collateral, such
as a business premises with a mortgage, if you fail to meet
your obligations to repay and pay interest.