As we’ve gone through a week that has undoubtedly been the most challenging week Australian’s have faced in living memory, for obvious reasons there has been significant discussion of the impact Government lockdowns have had on business. As I write this I am reading more retail chains are choosing to shut their doors, following yesterday’s news Myer would shut their doors for a minimum of four weeks.
These are businesses that haven’t been forced to close but are choosing to due to significantly declining sales as we all come to terms with the changes this virus is having on our lives.
No doubt there are a whole raft of other businesses, mum and dad, family businesses that are feeling the same, but are also feeling the pressure to stay open to try and continue to earn some money, such are the pressures we face.
I can think of only a handful of industries that won’t be feeling some impact in this current environment, and even those that may not have had an economic impact will likely be dealing with staffing, social distancing and hygiene issues, among other things.
This leads me to what I, and pretty much every other accountant, has been dealing with this week, which is fielding the many calls from our clients of how to deal with this.
Personally this has been tough as I’ve had clients’ business effectively cease, others that have had jobs cancelled and those who’ve been laid off, and it’s not easy to hear.
For those in business, the attack plan I’ve been giving clients to make them as strong as they can be to deal with this challenging time is the following:
- Firstly, in times like these, cash is king. Get and keep as much in your account as you can..
- Follow up your debtors immediately, this is work you’ve completed and you need to have discussions with your debtors so you know when you can expect payment. Set up payment plans if you need. If you’re dealing with other people in distress, be compassionate, but also understand your need for those funds too.
- Review your expenditure and immediately start reducing or cancelling those services, subscriptions, etc. that aren’t essential. Whilst they might be nice to have in flourishing times, if they don’t give you any benefit right now they need to go.
- Sell unnecessary equipment. It might not be the greatest time to sell some things, so keep that in mind, but where you still get value for unnecessary items, think strongly about selling them.
- Review the stimulus and assistance packages and make sure you’ve done what you need to be eligible and apply for those that you need. There are some great assistance measures out there for business right now, but you’ll need to act quick for some.
- If you haven’t got one already, create a cashflow forecast so you know EXACTLY where your money is going over at least the next 3 months. Update this as the weeks/months roll by.
- Follow up those debtors that you’ve organised payment plans with so they stay on top of them
- Review your insurances. Discuss with your broker/insurer what your policy inclusions are. As your business situation may have changed, you may not need some cover or you could reduce cover, saving you on your premium. Don’t cancel important insurances though!
- The ATO are offering payment deferrals, although these are currently not automatic. Discuss with your accountant if you need to contact the ATO.
- Talk to your lenders for payment moratoriums, most lenders are offering these for 3 to 6 months now.
- And the list can go on.
If you’re experiencing hardship, speak to your accountant, we’re are most definitely here to help!
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