COVID-19 Pandemic COVID-19 Pandemic Economic Crisis

How to steer your business safely through the

COVID-19 Pandemic Economic Crisis

Are you one of the many business owners who are getting increasingly concerned how this unfolding Corona virus pandemic is going to affect your business? Do you have cash flow concerns? Are you worried about not being able to pay your staff?

One of the biggest problems in an ever-evolving situation like this is when you don’t have the right information to guide your decision making.

Sure, there will be tough times ahead. However, you can get help now to ensure you come out the other end with your business and sanity intact. Let’s have a look at some of the main elements of the stimulus packages the Government and banking institutions are offering to business and individuals. Help from the Australian Government

1. Support for individuals and households Income support for individuals The Government will provide significant payments to assist lower-income Australians, including pensioners, other social security and veteran income support recipients and eligible concession card holders.

Payments to support households The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders. The first payment will be made from 31 March 2020 and the second payment will be made from 13 July 2020.

Temporary early release of superannuation The Government is allowing individuals affected by the Coronavirus to access up to $10,000 of their superannuation in 2019-20 and a further $10,000 in 2020-21.

Temporarily reducing superannuation minimum drawdown rates The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50 per cent for 2019-20 and 2020-21.

Reducing social security deeming rates On 12 March, the Government announced a 0.5 percentage point reduction in both the upper and lower social security deeming rates. The Government will now reduce these rates by another 0.25 percentage points.

The JobKeeper Payment is intended to provide wage subsidies to businesses that are significantly affected by COVID-19. A payment of $1,500 per fortnight to employers of eligible businesses to be paid to their employees so they can keep connected with their employer. Eligibility criteria for both employers and employees apply. Business owners can register interest here to apply for the JobKeeperPayment.

Boosting Cash Flow for Employers The Government is providing up to $100,000 to eligible small and medium-sized businesses, and not-for-profits (NFPs) that employ people, with a minimum payment of $20,000. Temporary relief for financially distressed businesses The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and to initiate bankrupt proceedings against an individual as well as temporarily increasing the time companies and individuals have to respond to statutory demands they receive.

Increasing the instant asset write-off The Government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020.

Backing business investment The Government is introducing a time-limited 15 month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions.

Supporting apprentices and trainees The Government is supporting small business to retain their apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for 9 months from 1 January 2020 to 30 September 2020.

Support for Coronavirus-affected regions and communities The Government will set aside $1 billion to support regions most significantly affected by the Coronavirus outbreak.

3. Supporting the flow of credit Support for immediate cash flow needs for SMEs Under the Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of 50 per cent

Quick and efficient access to credit for small business The Government is cutting red tape by providing a temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers.

For further details on the help available from the Australian Government visit the Treasury website. If you are confused whether any of these assistance measures could help your business and don’t know what to do or how to access the assistance, talk to your accountant right away.

Download a copy of the Fact Sheet Cash flow Assistance for Businesses, which gives some excellent examples of real business scenarios for businesses who employ staff, apprentices and trainees. They show clearly how this assistance flows through. Help from the Queensland Government

$2.5 billion for workers and industry Up to $500 million to assist workers who lose their job or income with retraining, job-matching and other help to transition into jobs in the industries that are vital to get Queensland through this crisis – such as health care, agriculture, food production, transport, cleaning and mining.

Industry Support Package The Industry Support Package will assist large businesses through this period to ensure they will be able to scale up and service the community when economic activity improves.

Other support for business Relief for businesses renting government premises. $500 rebate on electricity bills for all Queensland small and medium sized businesses that consume less then 100,000 kilowatt hours. This will be automatically applied to electricity bills.

$300 million for households $200 rebate for all 2.1 million Queensland households (including the $50 Asset Ownership Dividend already announced) to offset the cost of water and electricity bills. Automatically applied through household electricity bills.

Payroll Tax Relief Immediate payroll tax refunds of $740 million for COVID-19 affected businesses and a payroll tax holiday and deferral until the end of 2020 for eligible businesses.

Australian banks will defer loan repayments for small businesses affected by COVID-19 for six months. For more details visit their website. What you can do NOW to steer your business through the crisis

Tighten up your Cash Flow Management Cash is King! Especially in a crisis like this.

Check all your outstanding invoices and initiate follow up to collect payments on outstanding invoices. Consider tightening credit terms or even require cash in advance.

Make it easy for customers to pay your invoices by offering several ways to pay you, ie via credit card or direct bank deposit, online payment gateways or a merchant facility. That way you increase your chances of getting paid. Remember, when you get paid, you can also pay your creditors, which will have a massive flow on effect.

Review your lines of credit for availability. If you do not have a line of credit, get one so that you have the ability to borrow if needed.

Talk to your accountant about the best options for your business, ie help that’s available from Government, reviewing your business financial health and make a plan to so you don’t drown in debt and never have the ability to repay it. Borrow for the right reasons.

Change your sales and marketing strategy Try to continue generating sales, although it can be hard for businesses affected by the shutdown. It’s

encouraging that we’ve already seen examples of businesses thinking outside the box and who are finding different ways to serve their customers. Many are introducing online communication strategies to further decrease any risk of infections through face to face meetings and reassure their customers.

Above all, communicate with your existing customers and let them know you are there for them. Tell them how you’ve changed your business practices to keep operating safely, and ask them for what they need and how they think you can serve them best. You might receive some gems of ideas that can help you offer the service they need.

Offer gift cards for future services or products. Consider discounts for these cards as well, such as “Buy $100 of service for $80”. Contact your lender or credit card provider as they may have gift card programs you can implement.

If you are seeing a lot of cancellations and requests to return deposits for services, have a plan in place to encourage your customers to keep the deposit on hand but delay the services.

If you have more questions on how you can make sure your business will survive, and what type of help you could get from the stimulus package, call my office on (07) 3399 8844. You can also visit our website at www.straighttalkat.com.au and complete your details on our Home page to request an appointment.

Copyright © 2020 Robert Bauman.