Corona Virus Update

Practicalities

So, what practical things can you do to avoid a disaster [and a warning some of these will seem harsh, but they need to be]:

1. Only send cash out for essential items. Keeping cash reserves will be critical, and whilst it seems harsh to impact your suppliers, every business will be in the same boat. Maintaining an emergency level of cash could be the difference between short and long term success.
2. You have to start making decisions. You need to assess every staff member and determine whether they are critical to what will inevitably be slower operations. If you cannot make “that” decision yet, then you need to treat everyone equally, so that we all share the pain – so to speak. Make layoffs where you can, shorten hours to provide something for everyone, remove overtime and be prudent about wage increases. You are legally able to request employees to use their annual and long service leave and should be looking at this option.
3. Be very careful about short term money borrowing options. These guys are sharks circling and will not hesitate to call in their debt. They will be very active during this crisis, seeking to assist you but are no better than the hoarders of toilet paper.
4. Look at ways of innovating your sales process, that may well become the norm. Look at meeting via Skype or Zoom rather than face to face meetings,. Look into websites where you can turn your stock into cash quickly (at a reduced price, but at least with cash quickly). Locate different suppliers of products that have the stock you need – as pricing will be very competitive for a while in most items. .
5. Review your customers/clients. This is something that you should be doing periodically anyway, and it allows you to review how much a customer actually costs you. For example, do you have to answer 42 emails with every order, do they query every invoice, do they delay payment every month. These things cost you money and perhaps they should be managed out, or their custom restricted. Maybe make them pay up front for service, reduce their credit limits, call more regularly for payment and demand that they make a payment before accepting an order, or have a discussion about the problems that you are encountering, with the understanding that they may leave.
6. Access the Federal Government Stimulus program for small businesses.

On that last point, the program is still being finalised however the cash injection to your small business will have some conditions – as always.

What we know is that:

• Any asset that you buy can be written off immediately – up to $150,000 (up from 30,000)
• Any new asset over $150k can be written off by 50% in the first year. (up to June 30 2021)
• Cash flow incentives/assistance:
  • Each small business will get at least $2,000 [assuming that they employ at least one person.]
  • Then any business which employs someone will get up to $25,000 being 50% of that employee’s PAYG withheld.
  • 50% wage subsidy for apprentices.
  • It will be delivered automatically through the tax system via refunds in your BAS.
  • Tax deferral measures (still to be confirmed) for a four-month payment moratorium.

As these measures are delivered through the tax system, it appears as though only those businesses that have their tax obligations up to date, will be eligible.

So all tax returns and BAS/IAS must be lodged. Getting these up to date is now critical.

{More to come}