As the ever-changing circumstances surrounding COVID-19 continue to impact the business environment and day-to-day commercial operations, SME business owners need to be fully prepared to face the uncertain challenges which may arise in the immediate future.
In these current conditions, strategic planning incorporating financial management is more relevant than ever before. However, there are a number of operational procedures business owners will also need to strongly consider.
We’ve outlined below the areas business owners can address to help mitigate & navigate the impact of COVID-19 on business management & day-to-day operations:
Diligent Cash-Flow Management
It goes without saying, ‘cash-flow is key’ for business owners; – and maintaining a healthy business performance is essential for continued sustainability during this outbreak.
As we enter a tighter economic period as a result of COVID-19, be mindful to review and adjust your cash-flow budgets accordingly – assessing ‘pros’ & ‘cons’, and reflecting current conditions.
It is important to measure your revenue & expenses – ensuring your cash-flow positioning covers the next three, six, and nine-month period. To start your business review, apply the ‘matching principle’ – which will help to reflect not only the revenue for a certain period, but also the costs associated with those revenues.
It is likely that the pandemic will have some kind of impact across multiple business functions over an extended time-frame, therefore having cash available, pre-planning and having a clear understanding of your financial position is crucial.
The need for adjustment (where applicable) will also play a heightened role over the next 6-12 month period.
You may need to consider other potential revenue sources outside of your core service or product offering to strengthen your cash-flow. When assessing your financial position, evaluate whether your business is well-positioned to explore alternative avenues, without causing any additional or unnecessary strain on operations.
As we move forward, continually assess your financial options, ensure timely financial reporting, and create an open-line of communication across all debtors, creditors and business advisers.
Communication is Key
For business owners, consistent communication with both staff and external stakeholders is key during this period.
As we continue to see an increasing number of employers implementing their Business Continuity Plan, and transition to ‘Work from Home’ procedures, the need for open lines of communication are becoming more essential every day.
Methods such as video conferencing, group teleconference facilities, and email & messaging platforms, are all important tools to utilise to ensure your communication is clear and consistent.
You will also need to consider the manner in which you communicate with your external stakeholders – such as clients, referral partners, landlords, suppliers, contractors, and the ATO.
It is important you provide timely updates to these parties, ensuring they are kept well-informed with changing circumstances involving your business.
Supply Chain Management
Throughout this period, supply chain management and logistics planning will also be an important area for business owners to continually review and assess.
For businesses which rely on supplies, it is vital you speak with suppliers to formulate a strategy to help transition through this period and maintain your required levels of stock / inventory.
In the event that additional restrictions take effect, suppliers should contact their business partners to discuss an appropriate policy for moving forward. However being proactive in your communication with providers to develop a strategy can be a positive approach to help mitigate any impacts felt.
It is also important for businesses to gain an understanding of their entire supply chain channel – investigating where suppliers are receiving their stock/inventory, which in turn, is then passed on to your business.
By understanding these distribution channels and the full impacts of the pandemic, you may be able to source/secure alternative suppliers where required.
Tax Planning / Maintaining Tax Obligations
For SME businesses, it is important you maintain your tax obligations, staying current and compliant – especially during this uncertain period.
To assist businesses in this regard, we’ve released our FBT – 2020 Year Update, aimed at providing insight into recent developments regarding Fringe Benefit Tax and the key audit targets by the ATO for the year ahead. Our article can be found (here) for further reference.
Additionally, to help support businesses to ensure their on-going compliance, there have been a number of tax assistance and deferral support packages announced. These packages have been designed to assist business owners to continue to hold a sustainable financial position as we move forward through this pandemic.
To ensure you have a full understanding of the levels of support available, it is important to speak with an accountant or tax adviser sooner rather than later.
Tax planning can also be a useful tool to assist business owners in times of uncertainty. These sessions can help with implementing appropriate strategies in the lead up to the End of Financial Year, aimed at improving your overall tax position and cash-flow.
Given the time-frame, tax planning is best undertaken during April & May – with strategy sessions aimed at providing business owners with a greater understanding into reporting metrics and more control over finances.
Again, to find out how tax planning can provide additional support, it is important to speak with an accountant or tax adviser – who will highlight the best approaches in relation to your business.
Utilise Government Assistance Available
As mentioned earlier, there have been a number of support packages released to provide assistance to businesses, helping to navigate the challenges of COVID-19.
Over the last fortnight, the Federal and State Governments; alongside the Australian Tax Office (ATO) have announced their programs of support – which we have summarised via the following links:
Economic Stimulus Announcement - Stage One
Economic Stimulus Announcement - Stage Two
JobKeeper Payment Program
State - Extended Stimulus Support
COVID-19 Job Support Loan Scheme
|Australian Tax Office (ATO)||
Relief Options - Assistance & Support in Response to COVID-19
These programs are designed to aid businesses and boost cash-flow, therefore it is important to make use of the packages where required.
Should you need assistance with an application, a business adviser (such as an accountant) can help you to formulate a submission.
For More Information
For more information or for assistance formulating your business checklist as a result of the COVID-19 outbreak, please contact Ian Walker - Managing Director on (07) 3002 2699.