Financial management is important at all times, but it becomes especially imperative in these times of unsurmountable uncertainty and existential threat to businesses. We wanted to put out a piece to outline the steps that your business needs to undertake to shore up the business and come out stronger when this COVID-19 pandemic passes over.
In the short term (next 1-2 weeks after books have been updated and closed for Mar’2020):
- Pursue Receivables
Overdue accounts need to be chased up immediately and aggressively, while reminders and follow ups need to be performed for upcoming due invoices.
- Reduce Outlays
Businesses need to look at variable expenses and impending planned expenses, and avoid these in the immediate term.
- Access Federal Government’s Support for Businesses (2 key measures are highlighted below, with link to further measures made available in the last point)
- Boosting Cash Flow for Employers
Cash flow boosts of up to $100,000 (minimum $20,000) over 2 tranches (March-June and Jul-Oct) delivered through credits in the BAS submissions. Eligibility: Active businesses with turnover of <$50 million, made required payments to employees, and compliant with all filing requirements.
- JobKeeper Payment
Employers will receive $1,500 every fortnight from 30 March 2020 for each eligible employee for a maximum of 6 months. Eligibility: Employers turning over <$1bn/>$1bn who have experienced 30%/50% reduction in turnover for at least a month compared to comparable period 12 months ago, and employee employed as at 1 March 2020 and is currently still employed.
- Please visit to the following website for a complete overview and factsheets for all support for businesses. https://treasury.gov.au/coronavirus/businesses
- Access Victorian Government’s Economic Survival Package
The Victorian government has also come up with its own survival package which will complement the Federal Government’s Support. Please download the relevant fact sheet from https://www.business.vic.gov.au/disputes-disasters-and-succession-planning/illness-and-business-management-plan/coronavirus-business-support
In the longer term (beyond 2 weeks):
- Forecast/Reforecast Financials
Take a look at the changed economic landscape especially as it applies to your business, and develop revised assumptions to predict revenue and expenses, and how that translates to cash flow. Perform stress testing/scenario analysis
- Business/Profitability Review
Perform a detail review of the business and its Profit and Loss/Balance Sheet, and decide on all matters from organizational structure, automation, developing new business, and re-evaluating/renegotiating terms and costs.
If you need any clarification or assistance on any of the above, or any other matters, please do not hesitate to contact me at email@example.com