Dealing with Coronavirus (COVID-19)
We need to ensure that we have appropriate systems and policies in place to deal with what potentially lies ahead. Without being alarmist, with the rate of evolution of the current situation there's an increasing sense of inevitability around significant disruptions to the community around us.
Our immediate attention is to ensure the health and well-being of our team and clients and in doing so we can best support you. This could mean more of our team increasingly working from home. So while the way we support you will change a little behind the scenes, the level and quality of support you receive will remain unchanged.
The best way to protect yourself from COVID-19 is the same way you would protect yourself from catching the flu or other respiratory illness:
- clean your hands for at least 20 seconds with soap and water, or use an alcohol-based sanitiser with at least 60% alcohol.
- cover your sneeze or cough with your elbow or with tissue.
- avoid close contact with people who are ill
- avoid touching your eyes, nose and mouth
- stay home if you are sick and if unwell, avoid contact with others
- Social Distancing - To prevent the infection and/or spread, take care to;
- Avoid public places - gym, restaurants, events, public gatherings
- Avoid attending any meeting that is not essential or can be managed in other ways such as teleconference, Zoom or Skype
- Consider your mode of travel to the office and meetings
- Amend your manner of greetings – hand shakes, otherwise
- Try to maintain a distance of 1.5m
Australian Government's Coronavirus Stimulus Package for SMEs
The Prime Minister has announced a stimulus plan to curb the economic impact of the coronavirus and keep "Australians in jobs and businesses in business".
The package, which aims to provide an immediate stimulus to the economy, will be worth $17.6 billion of which $11 billion is expected to be spent before 30 June 2020.
Targeted at SMEs:
1. Businesses with turnovers up to $50 million will receive a tax free cashflow boost worth up to $25,000, designed to help pay wages.
To ensure integrity, businesses which pay the Australian Taxation Office income tax on their employee's salary and wages either quarterly or monthly, will receive a payment equal to 50% of the amount withheld, up to a maximum of $25,000 over the 4 month period.
The money will be available over the 4 months of March, April, May and June and the maximum that a business will be entitled to access in that period is $25,000.
Eligible businesses that pay salary and wages but are not required to withhold tax will receive a minimum payment of $2,000.
2. The government is providing assistance to businesses with less than 20 full-time employees to keep apprentices employed at 1 March 2020 in work by paying up to 50% of their salaries with a maximum of $7,000 each quarter in wage assistance for each apprentice so small businesses can retain existing apprentices and trainees, or re-employ apprentices and trainees who lose their positions from a small business because of the coronavirus downturn.
Where a business can't afford to hold onto an apprentice, the subsidy will be available to a new employer.
Initiatives Targeted at Businesses with Turnovers up to $500 Million:
1. New instant asset write off scheme.
The government will expand the instant asset write off scheme from 12 March 2020 until 1 July 2020 for businesses with turnovers up to $500 million which will be able to instantly write-off assets valued at up to $150,000.
2. There will also be a 50% accelerator depreciation deduction over and above what these businesses can already deduct in the first year and this will be available for 15 months to 30 June 2021.
If you have any questions on any aspects of these initiatives from the Federal government, please do not hesitate to contact us.
Government Loans and Grants for Natural Disasters
The Australian, State and Territory governments have introduced a series of loans and grants targeted at primary producers, farmers, fishermen, some exporters and small businesses to assist people whose farming and/or business activities have been significantly affected by the disastrous drought, bushfires, floods and cyclones.
The natural disaster loans and grants can be summarised as follows:
- Loans – Primary Producers and Farm Businesses
- Grants/Relief – Primary Producers
- Primary Producers and Businesses, Loans
- Small Business Loans
- Small Business Grants
If your farm or business is located within a "declared disaster area" you might be eligible to apply for a loan or grant from the government. If you would like to discuss this matter with us, please contact us.
Cashflow Forecasts, Budgets and Projected Balance Sheets Are Important
There is certainly a lot of uncertainty at present in the Australian economy.
Interest rates are at a record low because the Reserve Bank is very concerned about the state of the Australian economy.
Unemployment is slowly rising - and there is a significant increase in casual and part-time work being performed in Australia.
Debtors' payments have only improved by 0.4 of a day since the revelation in 2016 that Australia had the dubious title of the "longest debtors' days outstanding in the world". At that time Kate Carnell, the Australian government's Small Business Ombudsman, said that late payments are the "silent killer of small business".
The debtors' days' outstanding figure that Ms Carnell was commenting on was 56.4 days.
It was reported on 6 March 2020 that research by market analysts East and Partners had indicated that the SME waiting period for payment in Australia was currently 56 days. This highlights the real problem that businesses have in managing their debtors to try to ensure that invoices are prepared accurately, they are emailed to their customers promptly and that prompt follow-up action is implemented to have discussions with any customer who is outside the business' stipulated payment terms.
A Budget will show the expected income and expenditure for the business and the emerging profit. You can then calculate various "what if" scenarios to factor in potential changed circumstances e.g. lower or higher interest rates; fuel costs or currency conversion rates.
Budgeting lets you diagnose problems in advance. If the Budget you prepare doesn't provide you with an adequate profit, then you can decide on appropriate action to take to try to achieve your desired profit, rather than waiting for the events to unfold.
When the Budget is completed it is then the time to prepare a Cashflow Forecast. The Cashflow Forecast will reflect the figures contained within the Budget with appropriate timing differences for debtors' payments, creditors' payments, investment in stock as well as taxation commitments, loan repayments, dividends or drawings and capital expenditure.
The Budgeting and Cashflow Forecast process will benefit from the preparation of Projected Balance Sheets at the end of each financial year as part of the Budget/Cashflow Forecasts scenario. The preparation of the Projected Balance Sheets will enable accurate Projected Source and Application of Funds reports to be prepared which will assist management to understand what is happening to the cash generated within the business.
Most businesses in Australia are now caught in a cycle that could become quite vicious if appropriate planning is not undertaken now! If you would like to discuss with us the preparation of a Budget/Cashflow Forecasts and Projected Balance Sheets for the period through to 30 June 2020 and to 31 December 2020 which you can present to your bank, please contact us.