In the midst of a global pandemic, now more than ever, it is important as a business owner to have a good handle on your business’s cash needs. While some parts of the economy are starting to open back up, many businesses are only just starting to feel the full impact of dropping sales figures over the last couple of months.
So, as a business owner what can you do to safeguard your business’s cash?
Know your business’s cash needsYour break-even point is the point at which total income and your total outgoings are equal. Outgoings doesn’t just include expenses like materials, wages and rent that you would normally see in your Profit & Loss Statement, but also includes other costs to your business like loan repayments.
What’s the minimum sales you need each month, week or even day to cover your costs?
Make sure you’re getting paidIdentify costs can you cut, pause or negotiate different rates or terms for this period
A note on employee super…
Talk to the ATO
Don’t bury your head in the sand in relation to BAS and tax lodgements or the payment of taxes. Talking to the ATO early can mean negotiating extensions for lodgement and payment arrangements without late lodgement penalties or debt collection notices.
Determine what government assistance you are entitled to
Talk to your accountant/tax agent or another trusted advisor to ensure you are aware of, and accessing, any government financial assistance you may be entitled to.
Reach out to your banker
Many banks are offering pauses on repayments for business loans or credit cards, to help businesses get through this time of uncertainty. Proceed with caution though - interest will continue to accrue, so ensure you understand effect on your loan in doing this. Your bank may require you to ‘catch up’ immediately once the pause period is over (as a lump sum), may extend the term of the loan, or just increase the repayments for the balance of your current loan term to catch up the missed repayments.
Unsecured business loans of up to $250,000, for businesses who meet certain criteria, are available under the Australian Government Coronavirus SME Guarantee Scheme. Additionally some banks are providing a discount on the interest rate for certain small business loans.
Sell non-essential assets
Do you have business assets that are collecting dust? Selling them could free up some much needed cash!
Get your team on board
Talk to your team, keep them in the loop. This is a time of great uncertainty for them too. Ensure they understand what you are trying to achieve in relation to improving cash flow from customer collections or trimming the fat in relation to costs. It will help to have them focused on reducing wastage and to be on the lookout for areas where the business might be able capitalise on opportunities or make some savings.
Seek help
You do not have to go this alone. Your accountant or trusted adviser can help you during this time. If you feel like you aren’t getting the support you need, please contact the team at GTC Financial.