Wirecard Company was the favorite financial technology scene across European countries, especially Germany. It helped create excellent partnerships with like-minded countries that could use their brands in online business.
However, Wirecard Company is now facing a fight from all corners of the market globally to survive to carry out its business well. Through 2019, Wirecard Company could not account for 1.9 billion euros in their balance sheet. The graph below shows the Growth of Wirecard from the years 2010 to 2019 as the figures reported its development.
Through a report of 2019, if the 1.9 billion euros could not be accounted for, then Wirecard Company faces jeopardy in getting the loans, which amounts to 2 billion euros being terminated. The company’s market valuation has plummeted from a high of 24 billion euros to less than 5 billion euros. Since the F.T.’s report was initially published on January 30, 2019, its stock price has dropped by more than 70%.
When the money could not be accounted for while balancing a booking sheet, it is the reason why the fallout started of Wirecard Company. In addition, there was a lie in the public domain that 1.9 billion euros were saved at trustee banks in the Philippines, but later on, it was not valid. Reasonably, when things are revealed to be false, even the clients or the trusted customers of the company lose their confidence and withdraw their memberships.
After the police raided all the offices of Wirecard Company, it had to look for other alternatives to keep on going, so it could continue with its business. After Markus Braum resigned, Mr. Freis became the interim CEO of the company. With the new interim CEO, Wirecard announced very constructive talks with the bank groups that had the right to terminate the loan of 2 billion euros since the 1.9 billion euros could not be accounted for.
Reasonably, when serious business entities do not account for certain funds, especially if the money is borrowed from a bank, certain decisions must be made. The findings are for the company’s benefit so that a forensic audit can be carried out to know the cause of the scandals.
As an investor, I congratulate Wirecard for its rise since its establishment in 1999. It has demonstrated that businesses can be built from scratch and prosper with good and well-skilled management staff. Being a solid empire for over two decades is not easy since many companies never go beyond the second year upon establishment. However, challenges exist for any company or business entity, and ways have to be worked out to solve the menace.
The company’s management should never get involved with any fraudulent business, as this will taint the company’s name. Equally, a company should always be true to itself by not lying about its worthiness to the public. Similarly, when an audit is done, it should reflect that what is in the balance books is the same as what the auditor generals have. The performance of Wirecard Company was all along good until it could not account for the 1.9 billion euros, which indicated that the management was not there to fabricate customers.
Many red flags are drawn and seen by Wirecard Company that investors have to learn from and improve on. The company’s management should be interviewed to know their capabilities and bring that will benefit the company. Forensic audits should be done after three months and not yearly to know and record so that when doing the financial year audit, everything is well sorted and accounted for.
Prospective employers who do not give their time or commit their time to the employees of the company and the customers are a red flag. Reasonably, it means that the clients and the company’s employees can never be trusted even in making decisions upon getting feedback from the customers. Hence, it will lead the clients to withdraw their membership, and the employees can leak the information to the public, which is not professional.
With the company’s Chief Executive Officer not able to account for the 1.9 billion euros, it is a red flag for any business entity. My take is that through its central manager, the company is not well capable of running a business in which he cannot equitably account for where the money went. Solely it implies that the company CEO cannot even pay other employees, and in the end, the employees will resign when more labor is required.