The Element team are here during these difficult times to support and provide positivity to you and your business!
As a business owner, there’s one key thing you need to totally focus on now – keeping your business alive during these difficult times. It’s not all doom and gloom either – withstanding the tough times sets a business up to be a fast turning cash flow business when everything bounces back in a positive way in the future.
Remember that while cash flow is under control then so is your business. Downturns can be scary in the moment, usually because there is no plan in place for your business and the world around you appears to be panicking.
If you take actionable appropriate steps to create a Continuity Plan, then in reality a downturn is just a stop gap to the next upturn, where your business will be cash flow fit and ready to take full advantage.
You will need to build a cash “war chest” which will let you keep trading through the coming difficult months.
There are 7 key areas you need to consider immediately:
Cash – Preserve cash at all costs. You must immediately start building a cash “war chest” for your business to survive.
Protection – Update and upgrade your Asset Protection IMMEDIATELY. It’s very important to review strategies to protect the equity in your family home and other assets in personal names. It’s also vital for you to have an up to date Enduring Power of Attorney (EPOA) and Will, and to know where the original signed copies of these are located.
Banks and Funding – You should contact your bank immediately to arrange additional lines of credit if possible. Alternative funding sources should also be immediately considered. The time to act is NOW, not in 2 weeks’ time when the banks will be overwhelmed by other bank loan applications.
Management Team – Work through the COVID-19 Continuity Plan with your Management Team, then quickly communicate appropriate decisions to your entire team.
Employees – You need to openly discuss reduced working hours with your employees to save cash (if this does save cash) and working from home arrangements. Employees will be scared, so they need to be reassured by you and they need to be given an understanding of your plan to keep the business alive.
Customers & Suppliers – Great communication is needed to so that customers have peace of mind that it’s “business as usual” where possible, and so that you can rely on your suppliers.
Mental Health – This could be one of the most stressful times ever for you and your employees. We can provide links to assistance for you to help you and your team through this crisis.
To assist you, included in this Plan are the following checklists for meetings and emails for you to use in your business.
We recommend that you use them in the following order:
Business Owner Decisions – Meeting with Accountant
COVID-19 Continuity Plan
E-mail to Employees
Agenda for Team Meeting with all Employees
BUSINESS CONTINUITY PLAN
BUSINESS OWNER DECISIONS
Meeting with Accountant
To maintain your cash “war chest”, you may need to consider options that you haven’t consider before. Right now, above all else, you need to do anything that is needed to keep your business alive.
Maximise Cash Receipts from Stimulus Package
Review the Australian Government stimulus package for business cash flow. Work with your Accountant to identify which key parts your business is eligible for and get the process started to obtain these cash flow bonuses.
There may be some opportunities to restructure how business owners receive wages payments so that your Stimulus Package amounts received are maximised.
Prepare a Cash Flow Forecast for 12 Months
Meet with your Accountant to create or update your business cash flow plan over the coming months. You need to your daily and weekly planned cash position to make informed decisions, like when you may need additional bank funding.
Consider Delaying Tax Payments to the ATO
Keeping your business alive means paying your employees, your key suppliers, your rent and your Accountant (so we can keep helping you during this crisis) each week! Nothings else matters over the short term.
You may need to delay making payments of GST, PAYG Withholding Tax and Employee PAYG Tax to the ATO. You should set up a second bank account (separate from your main trading account) and each week transfer cash for these payments across into it. If needed, you can then dip into this cash reserve to keep your business alive.
See the section below about ATO Tax Relief Options.
Important: It’s vital that you keep lodging your Business Activity Statements (BAS’s) and Instalment Activity Statements (IAS’s) by their due dates and negotiate a delayed payment with the ATO, otherwise the ATO may view the PAYG withholding portion as non-compliant and you will then lose you tax deduction for these amounts.
Arrange Additional Bank Funding
Contact your Bank Manager ASAP and arrange for additional bank funding / lines of credit that can be approved NOW for use in an emergency. Making these arrangements early before things have gone bad is the key. Bank approvals may take up to one month or longer, so start the process today.
Consider Alternative Funding Arrangements
Consider using alternative funders such as Moula or Prospa to set up a short term line of credit now to pay for inventory and operating costs. These funders lend based on the cash flow of your business and don’t need property security. You should consider doing this as a backup now to any other bank lending arrangements you may have.
Protect Your Personal Assets
Now is the time to upgrade / update your asset protection. Consider if you need to protect the equity in your Family Home or other assets in personal names with a “Gift and Loan Back arrangement” – with no stamp duty or Capital Gains Tax consequences.
Enduring Power of Attorney (EPOA) + Will – Create or Update these NOW
If you have to self-quarantine or if you incapacitated in any way, you need to have an EPOA in place so your business can continue to operate.
Ensure your EPOA and Will are up to date now and ensure your family and your Accountant know where the original signed documents are.
While all your employees want to keep receiving their full salaries and wages, if your business runs out of cash then they no longer have their jobs. Everyone is suffering and tightening up in the short term, so we all have to work together.
Do you have to reduce working hours of some employees?
Decide if you should offer unpaid leave to your employees. Some businesses are suggesting that employees take unpaid leave on a roster basis.
Decide on how to inform employees of you need to stand them down for the short term.
Review your general insurance policies for any Business Interruption Insurance inclusions. Now is the time to contact your insurance agent to review your policy to understand precisely what you are and are not covered for in the event of an extended incident.
Review ATO Tax Relief Options
The Australia Taxation Office (ATO) is implementing a series of relief options to assist those impacted by the coronavirus. The relief will not be automatically applied.
You or your Accountant will need to contact the ATO to make any of the following requests for assistance.
Businesses can call the ATO’s Emergency Support Infoline (1800 806 218) to discuss relief options based on their needs and circumstances.
Individuals and businesses can request deferral of some payments (by up to 4 months) and vary instalments.
Businesses (under $20 million turnover) can elect to report and pay their GST monthly instead of quarterly to accelerate access to GST refunds, but only from 1 April 2020, and must remain monthly for 12 months.
Quarterly payers can vary their PAYG instalments for the March 2020 quarter, and claim a refund of instalments paid for the Sep and Dec 2019 quarters.
Businesses can request remittance of interest and penalties applied to tax liabilities incurred after 23 January 2020.
Businesses can request a low interest payment plan.
Employers still need to meet their SG obligations. The ATO has no discretion under the SGC rules to vary the due date or waive the SGC where contributions are late/unpaid.
Your Cash Flow
You and your Management Team will need to remain calm as you lead your employees through this crisis. This will allow for decisive and clear decisions to be made without any undue disruptions. If you are calm, you will have a competitive advantage over most businesses.
Remaining positive and being seen to be positive is the best way through any crisis.
Outstanding Accounts Receivable
Double down on verifying outstanding invoices with customers, so you know there is no realistic reason for a customer to dispute or delay payment when the time comes.
Confirm Expected Receipt Dates
Confirm the date that your customer has in their payable schedule for paying your invoices. You can then send reminders to see if the payment arrives on time, and if not you have an alarm bell to be proactive in following up your cash flow.
Chase Up Late Payments FAST
Don’t be complacent in chasing late payments. You need to set a standard with your customers of what is expected. It’s proven that setting the expectation means you will be paid quicker than the other suppliers who are not chasing up on this.
Sell Unused Equipment
Be realistic about what equipment you need in your business. Decide if you can sell any underutilised or obsolete equipment so as to create your cash “war chest”.
Fixed Term Contracts
Discuss these with Suppliers and ask if they can be reduced or cancelled. Don’t assume that suppliers won’t work with you. You paying a supplier a smaller payment will be better for them than receiving no payment if your business closes.
Discuss terms with your suppliers to see if you can extend your terms, have a cash reserve request or get a discount from your suppliers if you pay early.
Reduce costs where possible. Many businesses have extras that in the good times seem to be needed (eg. lunches, training courses). Be critical and if there is an expense that will not put you at risk or reduce productivity at this time, then think seriously about cutting it.
Loan & Lease Repayments
Most banks have hardship teams offering a range of services that may be of support. For more information, or to find the number for your bank’s hardship team go to https://www.ausbanking.org.au/campaigns/financial-hardship/.
Talk openly with your employees. They will possibly be scared and unsure for their jobs. Let them know you are in control and that while there is a tough outlook in the short term, the business is prepared to sustain things as best it can. Be honest but positive and rallying your team to give all the productivity they can is the best plan of action.
Policy for Customer / Client Meetings
No hand shaking – use toe taps or elbow bumps instead!
Encourage Zoom / Skype / Microsoft Teams online meetings
Share the numbers with your employees and, as a team, work through the solutions so that EVERYONE knows what part THEY have to play.
Innovation + Technology
Use technology wherever you can such as Zoom, Skype, Facetime or Microsoft Teams. This is an effective way to communicate generally, however it is even more important during this time.
Have measures been put in place to support good hygiene and health for your employees, including restrictions to international travel, advice on attending client meetings, site visits and events?
Policy if Feeling Unwell
Do you have a clearly communicated policy on what your employees should do if they are feeling unwell – including seeking medical attention and isolation? What will this mean for colleagues and clients if you suspect a case of COVID-19?
Reduce Infection Risk
How will you reduce the risk of others becoming infected, such as closing the workplace and cleaning?
How will you monitor the health of any employees that may be exposed?
Working From Home Policy
Consider a working from home policy. Requirements include:
Policy Agreement for employees
Management of data security risks
Can you test working from home arrangements?
Policy on Events
Defer non-essential training. Reduce attendees.
Your Customers / Clients
Communicate regularly with your customers/clients through email, your website and social media pages to ensure they know you are open for business.
Advise clients / customers of your businesses COVID-19 plans.
Do you need to inform your clients and customers of any changes to your services? This could include different opening times, delays in deliveries or deadlines.
Advise your customers/clients about the measures and protocols you are taking to make your premises safe and how you will interact moving forward.
Offer discounts or other payment terms to your key customers to encourage them to keep buying from you.
How will you respond to customers not consuming your goods or services for fear of catching Coronavirus?
Give reasons to customers to increase their purchases of your goods and services now before the full impacts hit their business.
Develop strategies for winning back customers.
Talk to your key suppliers about their COVID-19 contingency plan.
With international travel and export impacted by COVID-19, have you assessed the strength of your supply chain and do you have alternatives in place if you need to source another provider?
Keep your Stock Levels Up
Stockpile essential items you believe may run out.
Support from Suppliers
Which customers will need extended terms from you and which suppliers might require different arrangements? Liaise with your suppliers to determine how they can support you.
Thanks for your help and support during this crisis time with the Coronavirus / COVID-19 affecting everyone across the world.
I want to inform everyone of what is happening so you are fully aware.
Right now, it’s business as usual.
If the Government makes us all stay home for a period of time, we’ll then make some changes to comply with this.
My focus is to create a cash “war chest” for the business so we can keep making vital payments each week to our employees and key suppliers.
As a business owner, there’s one key thing I am keeping totally focused on now – keeping this business alive during these difficult times.
It’s not all doom and gloom either – withstanding the tough times sets a business up to perform well when everything bounces back in a positive way in the future.
Your physical and mental health is exceptionally important to me.
Please ensure you use hand sanitiser on a continual basis during the day and avoid touching your face
Please inform your manager if you feel unwell at any time, and we’re happy for you to self-quarantine at home.
We may have to discuss working arrangements in the near future.
If we can keep working at our workplace and if our income keeps coming in, then nothing changes.
But if our income from customers drops, we may need to consider working less hours or even asking if anyone wants to take unpaid leave on a roster basis.
I hope it doesn’t come to this, but a reduced wage for a short period of time is better than no job if this business can’t survive. This is when we all need to work together to help each other.
If we do end up allowing or requesting that you to work from home, you will need to be very aware of our IT and Internet Usage Policy and Working from Home employment policies.
We will also provide you with working from home best practice tips.
Our Customers / Clients
Where possible, we will have online meetings using Zoom / Skype / Microsoft Teams / Facetime.
If you do meet with a client, we recommend no handshakes (use toe taps instead!)
We’re positive that if we work closely together, we will get through this unprecedented time and this business will be in great shape when customer demand picks up.
Good open communication is the key here.
If anyone has any questions or concerns at all – please see your Manager or myself and we can assist you!
Coronavirus COVID-19 Stimulus Package
Below are 2 emails you can send to your clients – one for ALL clients, the other for BUSINESS OWNERS.
SUBJECT – TO ALL CLIENTS
Important: An update on ELEMENT ACCOUNTANTS & ADVISORS’ response to COVID-19
In light of the recent developments around the Coronavirus (or COVID-19) and the uncertainty we are all facing day to day, we felt it important to email you to assure you that we expect no major interruptions to the services that we provide to you.
OUR CLOUD SYSTEMS MEAN YOU CAN ALWAYS CONTACT US IF YOU NEED US
While we don’t know if we’ll be working from our office or working from our homes in coming weeks, we have invested heavily in the latest technology in recent years, and this means we can keep assisting you no matter what may happen.
All members of our team are able to work remotely and have access to all the technology systems and tools they use daily to assist their clients.
Please keep emailing or phoning when you need us, and we will be here to help you!
GOOD ADVICE IS NEEDED NOW MORE THAN EVER
If you have any general queries, requests for bookings for meetings or requests for documents, please feel free to contact email@example.com
Business and Tax
The Australian Government has just released their $17.6 billion economic stimulus package in response to the Coronavirus (refer below link for additional details – pages 4 & 5). It is designed to help employers to keep their workforce levels. There are key tax benefits that business owners need to access over the next few months. Our expert Accountants are here to help business owners receive the maximum benefits they can.
For any questions you may have about accounting, tax or business matters, please feel free to contact the Directors Brett Angus (firstname.lastname@example.org) or Jaycen Wilson (email@example.com)
By now you would have seen that the share markets globally have crashed due to fear and uncertainty in the marketplace.
Unfortunately we cannot advise on investment specific matters, however we are always open for a discussion, and may be able to pass on details of other professionals that may be able to assist your further.
IMPORTANT – GET YOUR ENDURING POWER OF ATTORNEY (EPOA) AND WILL UPDATED NOW
If you have to self-quarantine or are admitted to hospital, if you don’t have an EPOA then no-one else can make important business or financial decisions on your behalf.
We strongly recommend that you have an up to date EPOA and Will, and that your family know where these are stored.
These are times when we need to stay calm and rely on reliable news sources and information from State and Australian Government websites. What you see on social media may be unreliable information – we recommend you view this information with careful consideration.
Our team at Element Accountants & Advisors are here to help you. Please do not hesitate to contact our office if you need any assistance!
SUBJECT – BUSINESS OWNERS
Possible Action Required: Assistance for your business to cope with the Coronavirus effects
Here is a 2-minute email with some insights to help you during this difficult time with the Coronavirus (or COVID-19) affecting all of us.
As a business owner, you need to face the possibility of team members being absent from your workplace, product supply issues and demand for your services and products reducing over the short term.
There are 3 urgent things you need to be aware of:
Government Stimulus Package – Our upcoming meetings with you this year will be VITAL!
Business Continuity Planning (attached to this email)
Get your Will and Enduring Power Of Attorney (EPOA) updated / set up NOW
1. GOVERNMENT STIMULUS PACKAGE
The Australian Government has just released a $17.6 billion economic stimulus package. The package has been marketed as a measure to protect the economy by maintaining confidence, supporting investment and keeping people in their jobs.
The key tax and stimulus measures include:
From Thursday 12 March 2020, the instant asset write-off threshold has been increased from $30,000 (for businesses with an aggregated turnover of less than $50 million) to $150,000 (for businesses with an aggregated turnover of less than $500 million) until 30 June 2020.
A time-limited 15-month investment incentive (through to 30 June 2021) which will operate to accelerate certain depreciation deductions. This measure will also be available to businesses with a turnover of less than $500 million, which will be able to immediately deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost. As announced, this measure is proposed to only apply to new depreciating assets first used, or installed ready for use, by 30 June 2021.
Tax-free payments of up to $25,000 for eligible small and medium businesses (i.e., with a turnover of less than $50 million that employ staff) based on their PAYG withholding obligations. This is not a cash payment, but it is a credit equal to 50% of the PAYG amounts withheld from salary and wages paid to employees.
Businesses that lodge activity statements on a quarterly basis will be eligible to receive the credit for the quarters ending March 2020 and June 2020. Business that lodge on a monthly basis will be eligible for the credit for the March 2020, April 2020, May 2020 and June 2020 lodgements.
If a business pays salary and wages to employees but is not required to withhold any tax, then a minimum payment of $2,000 will still be made. The minimum $2,000 payment will be applied to the first activity statement lodgement.
Wage subsidies to support the retention of apprentices and trainees – Employers with less than 20 full-time employees may be entitled to apply for Government funded wage subsidies amounting to 50% of an apprentice’s or trainee’s wage for up to nine months from 1 January 2020 to 30 September 2020. The maximum subsidy for each apprentice/trainee is $21,000.
Tax-free payments of $750 to social security, veteran and other income support recipients and eligible concession card holders. It is estimated that around half of those who will benefit will be pensioners. These payments will commence to be automatically made from 31 March 2020.
Please note: We can assist you with opportunities to restructure how you pay yourself so that you can receive the maximum cashflow assistance amounts from the Government.
Please contact our office if you would like to meet with us to ensure you receive your maximum cashflow assistance from the Government.
2. BUSINESS CONTINUITY PLANNING
As a business owner, now is the time to plan for employees being away from your workplace, shortages of supply, reduction in sales, and the possibility of your workplace being closed for a short period of time if everyone is being forced to self-quarantine.
Over the next few weeks, we would like to meet with you (or via phone/skype/etc) to discuss the following:
Employees working from home, and workplace obligations
How to pay your bills in the short term if your sales start to dry up
How to communicate in a reassuring way with your clients and customers
How to keep things moving with your business
We’re not suggesting in any way that we have all the answers, but it is important for us to work with you and help you and plan for what will happen in the weeks and months ahead.
3. GET YOUR WILL AND EPOA UPDATED / SET UP NOW
If you have to self-quarantine or are admitted to hospital, if you don’t have an EPOA then no-one else can make important business or financial decisions on your behalf.
As a business owner, it is 100% essential that you have an up to date EPOA and Will, and that your family know where these are stored.
How we can help
Our team at Element Accountants & Advisors are here to help you. We are a cloud-based firm, so even if we are not physically available in the off
ice, we are available!
As a starting point we have collaborated with other accountants to produce the attached Business Continuity Plan. Please read this document in full, and consider how this impacts your business.
We do understand that for many small businesses cashflow at this time is of critical importance, which is why we have provided this document to all our small business owners at no charge. However, we do highly recommend you book a meeting with our office to run through your specific circumstances, which will be at a fixed fee of $350 + GST, for the 1-hour appointment and post meeting summary.
If you would like to take advantage of this please contact our office on (02) 4957 6999 to arrange a meeting. This can be a phone meeting or virtual meeting (Skype etc) if preferred.
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