We are right among some serious times for Business not only in Australia but globally, Three weeks ago was the Savage Setback, this week we are into Survival not Guaranteed times.
Plenty of Small to Medium Businesses will not see the end of this financial year. There are no easy answers, and for some businesses there are no answers at all.
For the 30 years I have been in the Accounting Profession we have gritted through some bad times before (GFC, 9-11). Here are a few things you can do to keep paddling. Theyll increase the odds that you'll be one business still standing when the vaccine reinforcements arrive in 12 months or however long it takes.
1. Do your Cashflow Forecasts Now
This is number one for a reason. It's like asking airline pilots if they have checked the fuel. Not just a check of revenue forecast, a check of the bank balance, plus Accounts receivable less Accounts Payable sort of math. This is not good enough. You need details: wages, rent, tax, supplier payments, documented down to the day they're due.
2.Have the COVID-19 Chat with suppliers
You will owe money to two sorts of organisations: the businesses you work with every week, and the larger ogres like landlord, banks and the tax office. The first care about your ongoing survival, the second... not so much.
Now is the time to talk to your ongoing suppliers and be honest. Now is the time to ask them to help you to survive in whatever way they can, so you can be a good, ongoing customer in the future.
Talk to the ATO and tell them honestly about the state of your business. Ask for a payment plan. The stimulus package announced by the Government recently will provide some cashflow assistance once March 2020 BAS's are lodged and continue for the June quarter. This is 6 months. You need to be planning 12 months ahead as a minimum.
3. Don't wait for the Government to rescue you.
It is very easy to complain the government doesn't do enough to help small business. Deal with your own affairs as if there was no government help coming. Treat any help as a bonus. There is no government superhero coming to save you in your COVID-19 movie. It's up to you. Our team of Accountants are working behind the scenes to ensure all our clients will come out the other side of this pandemic. We are identifying clients who could most be at risk and will work with them to assist with their survival.
4. Come up with new ideas for your pricing and terms
Think about how you can get paid upfront. Tighten up your payment terms and offer incentive for upfront payment. Get payment in stages rather than at the end of the project. Use payment platforms like Ezidebit or Integrapay to offer recurring payment plans. Please do not rely on ATO concessions. These will be a bonus.
5. Start your Tax Planning Now
Interest rates are at an all time low. If you require to make some new capital purchases - think about doing it now. The instant asset writeoff has now increased to $150000 for businesses with turnover less than $500 million. If you have been holding off on upgrading a car, new photocopier, computers or office renovation - consider these tax benefits before 30 June 2020.
Talk to your bank or lending service about refinancing. Consolidate your loans/credit cards now to reduce payments.
Unlike the bushfire relief measures, which applied automatically to particular geographic areas, assistance measures for those impacted by COVID-19 will not be automatically implemented. Anyone impacted by COVID-19 (Emergency situations -where people cannot pay for food or accommodation) is advised to contact the ATO to request assistance on the Emergency Support Infoline 1800 806 218.