These past 7 days have seen Australia go from relative normality in everyday life to a much more restrictive existence. 

This email is not intended to induce any panic or anxiety in small business owners (there is enough of that around with commercial media already).  It is merely a pre-emptive to get you to start thinking more seriously about the worst-case scenario and the steps you can start to put in place now to prepare for it.

We all obviously hope that things will not get any more restrictive than they currently are but we need to plan for the worst and hope in hind-sight that we all over-reacted.  Based on what we are seeing happen overseas though, I think it is reasonable to assume that business and everyday life will get more restrictive in the coming weeks.

Below is a list of areas to start considering in your business and things you need to be thinking about as small business owners:

1. Plan for the worst – this could be a 2-4 week shutdown (maybe longer) of the local economy where only essential services (such as supermarkets, chemists, medical centres etc) will remain open. Draw up a contingency plan now.  You will need to consider staff, perishable stock, cashflow, debt repayments, etc.
2. Cashflow is king – for the next 6 months at least, you need to monitor your cashflow very carefully.  Postpone any large capital outlays you may have been planning, restrict any non-essential business expenses and tighten personal budgets.  Further ideas below.
3. Income – start to think outside of the box for your industry.  Increased takeaway and delivery options for café’s and restaurants, more property virtual tours for real estate agents, opening an on-line store, a once-off ‘coronavirus’ discount or special.  What can you do to ensure your business continues to operate if “social distancing” starts to impact your turnover.
4. Income part 2 – do as much work as you possibly can now – this may mean working overtime or on weekends for a short period – the idea is to build up some excess cash now in case things get any worse and you can’t work for a period of time.  Hopefully this doesn’t occur and you can use this excess cash for a well deserved holiday!
5. Advertising – now is the time to boost your online presence as much as possible.  With more and more people having to work from home and spending time on facebook, twitter etc, there will be an opportunity for those businesses who can attract people to their online store or website and hopefully convert them into customers.
6. Stock – obviously there is a shortage of products already in the local community for some items, but where possible start to run your stock down to lower levels, particular on items that have a short shelf life.  Monitor your stock levels closely and if your holding slow moving stock now might be a time to have a sale to try and convert it into cash.
7. Rent – consider asking your landlord for a discount or at least a partial deferral of rent for 3-6 months just to give yourself some breathing room and retain some extra cash in the business for the short-term.  Most landlords don’t want their tenants to go bust, especially in Townsville, so you may find people receptive to this idea.
8. Staff – obviously you don’t want to let go of staff as this will only make the current situation worse, but as a small business owner you need to consider your family first and foremost.  If business starts to fall away, look at reducing your casual hours (but try and spread this across all your casual employees).  As business owners you may need to start working longer hours yourself (as if you weren’t working enough already!).  If there is a shut-down look at offering staff the option of unpaid leave vs annual leave or maybe spreading their annual leave of 2 weeks over 4 weeks with a combination of annual leave & unpaid leave.  Refer to Fair Work Australia for more information.
9. Banks – if things start to get tight with your cashflow, talk to your banks if you have upcoming loan or equipment finance repayments and find out what your options are if you wish to defer or reduce these payments for 3-6 months.  As this situation drags on it is likely that they will be more receptive to assisting you if they can.
10. Debtors – unfortunately if things get tougher, your debtors are going to delay in paying you.  Its important that if you have debtors that overdue that you contact them early and put in place a payment plan.  Many of these debtors will be in the same situation as you.
11. Suppliers – the same applies for businesses you owe money to.  Contact them early if you think you are going to have trouble paying them by the due date and enter into a payment plan with them – most will appreciate the contact and will do what they can to help.
12. ATO – the government has already announced some incentives for small business with more to come.  For employers there will be a credit for 50% of your PAYG Withholding obligation in the March and June quarter for up to a maximum of $25,000.  In these next few Business Activity Statements you should also look at amending your Income Tax Instalments to nil and entering into a payment arrangement with the ATO.  You will still need to pay your tax and BAS at some future time but again it’s just about allowing you to keep cash in the business until things return to some semblance of normality.
13. SUPPORT OTHER LOCAL BUSINESSES WHENEVER YOU CAN!

 
These are just a few ideas for small business owners to start considering.  As I said above, we all hope and pray that things don’t get much worse than they currently are, but its prudent to plan for it just in case.

If anybody comes across useful articles from other accountants or businesses or further government resources for small business, please send them through to me so that I can share them around with everyone.  I think its important that we share information and resources as much as possible with our networks so that we can all make informed decisions during this time.

Issues with the virus have quickly ramped up in Australia over the weekend and its likely that we are all going to see further restrictions and issues arise as the government receives updates from their experts.

This is going to be a particularly difficult time for small businesses who will feel the financial impact of these restrictions maybe harder than anyone else in the community.

Below are links to various articles and information to assist small business thus far.  As information continues to be updated and released we will try and get this out to clients as soon as possible.

Cashflow will be extremely important to small businesses to see them through this difficult period but also able to ramp things back up when life returns to normal.

Ten emerging business and tax impacts from coronavirus (COVID-19) – Chartered Accountants Australia & New Zealand

Help on offer for small businesses financially affected by coronavirus – Australian Banking Association

Support measures to assist those affected by COVID-19 - Australian Taxation Office

COVID-19 Information and Support - CPA Australia

Coronavirus information and support for business - Australian Government Business

Please feel free to contact me if you have any further questions at this time.

Boosting cash flow for employers
Provides $25,000 back to small and medium-sized businesses, with a minimum payment of $2,000 for eligible businesses.  The payment will be tax free.
The payment will be delivered via the March & June Activity Statement for quarterly lodgers and March, April, May & June Activity Statement for monthly lodgers.
Eligible businesses that withhold tax to the ATO on their employee’s salary and wages will receive a payment equal to 50% of the amount withheld, up to a maximum payment of $25,000.
For more information see boosting-cash-flow-for-employers
Increasing the Instant Asset Write-Off
The instant asset write-off threshold has been increased from $30,000 to $150,000 from the 12th March 2020 until the 30th June 2020 for new or second-hand assets that are used or installed within this period.
Note that the Instant Asset Write-Off is due to revert to $1,000 for small businesses from 1 July 2020 and will include any assets ordered before June 30, but not available for use until after the 1st July.
For more information see instant-asset-write-off
Backing Business Investment
A time limited 15 month incentive to accelerate depreciation deductions.  Applies to assets acquired from 12 March 2020 until the 30 June 2021 for new assets only that are used or installed within this period.
There will be a deduction of 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the assets cost. 
Those assets that already claimed under the Instant Asset Write-Off will not be eligible.
For more information see backing-business-investment-bbi
Supporting apprentices and trainees
If you employ an apprentice or trainee you may be eligible for a wage subsidy of 50% of their wage paid from 1 January 2020 to 30 September 2020.
Employers will be reimbursed up to a maximum of $21,000, per eligible apprentice or trainee ($7,000 per quarter).
The subsidy will be available to small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee.
The scheme will be run by an Australian Apprenticeship Support Network provider.
For more information see supporting-apprentices-and-trainees

To save time finding out what you can or can’t include as deductions on your tax return (so you can keep records for us over the income year), the ATO has developed a suite of occupation-specific guides. It says these have been designed to help taxpayers understand what they can think about including, or what is completely off the table, as work-related expenses.
The information included in the guides (presented in PDF format) is broken down into different deduction labels, including:

• car expenses
• home office expenses
• clothing expenses
• self-education or professional development expenses.

The deduction guidelines are available for the following occupations:

• construction worker
• retail worker
• office worker
• Australian Defence Force
• sales and marketing
• nurse, midwife or carer
• police officer
• public servant
• teacher
• truck driver.

The ATO says taxpayers can download the guidelines in PDF format from the ATO Publication Ordering Service. To order, select the green button “Search PDF publications” – type in JS39108 (capitals not essential) and search “Online publications” as the media (it may already be selected).
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Managing your debtors is the key to your cashflow and ensuring your business can survive the ups and downs that naturally occur in any economy.

​Debtors management is not difficult but it requires business's to be vigilant and ensure that staff are following procedures.

​The key concepts of any debtors management policy will revolve around the following key points:

• where possible, always try and agree the price up front with your customer, this avoids any possible "bill shock";
• ensure that your customer is aware of your debtors policy or have them sign an engagement document that clearly states your debtors policy;
• before offering new customers payment terms, trial them on a cash-up-front basis for a few purchases or relatively short terms such as 7 days payment.  This gives you the opportunity to test their credit worthiness before offering them a larger account of longer payment terms;
  
• ​ensure that invoices are sent out promptly, preferably as soon as the service or good is supplied;
• offer customers numerous ways to pay - direct debit, credit card, Paypal etc
• once a debt become due have a policy for how it is followed up - many cloud based accounting programs or add-on apps can automate this process for you by sending out reminder emails, statements etc;
• one of the least enjoyable areas of managing your business is debt collection, but where debts become overdue and statements and reminder emails have not worked, it will require a staff member to follow up with a phone call to the customer;
  
• a lot of businesses are doing it tough, particularly outside of our capital cities, so payment arrangements are becoming more common - however as soon as a customer defaults on the payment arrangement be strict with them about the terms to repay the balance of the debt and ensure that future sales are paid in full up-front;
• where a customer has received a certain amount of friendly reminders (2 or 3 should be more than sufficient) and they are avoiding communicating with you then don't hesitate to engage a debt collection agency or solicitor to chase up the debt or if under $25,000 you can make a claim through the Queensland Civil and Administrative Tribunal;
• unfortunately bankruptcy and insolvency are rising problems, if this occurs then it is important that your debt is registered with the liquidator for any possible payment.  It may also require you to communicate with your creditors and setup payment arrangements to assist your cashflow;
  
• finally, where a new or even regular customer is starting to become one of your key customers, spend a few dollars with a credit agency to check their credit rating before offering them payment terms.
  

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​These are just a few key points of any debtor policy.  The important thing though is to ensure that your policy is documented, staff and customers are aware of the policy and you strictly adhere to it.

​If you need any assistance in documenting a debtors policy for your business then don't hesitate to contact FinBiz Solutions for futher information.

​Always remember - cashflow is the lifeblood of your business.

Cloud computing is not right for everyone, but everyone should at least investigate the plethora of cloud based options available before dismissing it. 

Firstly, ‘cloud’ is a metaphor for the internet and ‘cloud computing’ simply means storing and accessing your data and programs over the internet instead of on your computers hard drive.

The benefits of being able to access your data and programs over the internet are obvious in that the only limitation on where or when you work is having reliable internet access.  This problem is quickly being eroded however with the growing amount of data being offered by phone companies in their mobile plans at much more reasonable rates than even 12 months ago.  So as long as you have a mobile phone you potentially have fast access to the internet by using your phone’s hotspot.

No longer having to worry about installing an update to your programs can be significant, as well as the cost of installing new software which in the past was a significant portion of any budget.  Most cloud based programs offer monthly packages for which the number of users can be increased as your business grows.  This also makes the cost of changing software no longer a barrier to improving your businesses efficiency if better products are launched on the marketplace. 

Training staff which would often involve getting a specialist to come to your office or sending staff away to get trained can now be handled via webinars and online training.

With the rollout of the NBN the number of businesses utilising the cloud to access their data and programs is likely to increase exponentially.  However, there will still be a number of places in Australia (particularly rural Australia) who will not have access to the NBN for a number of years to come or possibly ever.

For any business its important to test how reliable and fast your internet is with a free trial version of any cloud based program before you jump in and switch everything across to the cloud.  Its also important to know how secure your data is on the ‘cloud’.  Companies like Microsoft, MYOB and Xero spend millions ensuring your data is stored on secured servers located throughout Australia and the world, however for every Microsoft, there are other companies offering similar services whose data servers may not be as secure.

While you may be concerned about storing your data on the ‘cloud’, it can often be the case that the ‘cloud’ is a lot more secure than your hard drive, particularly if your computer is connected to the internet.  How often have you heard people complain about being caught out with a ‘virus’ they inadvertently opened on their home computer and they lost everything.  If you don’t have appropriate security and backups in your business this can happen to anyone.  If your data is stored in the cloud this should not be a problem because even if your computer dies, you can simply replace that computer and log on to the ‘cloud’ to access your data.

Most people already use the ‘cloud’ possibly without even knowing it.  Most mobile phones will backup your mail, contacts, calendar and more to the ‘cloud’ and nearly everyone has an email application hosted on the internet – think Gmail, Hotmail, Bigpond etc.

The biggest argument against the ‘cloud’ is the possibility of not having internet access for an extended period of time or the cloud program suffering an outage (although these are usually limited to just hours for any major players).
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Whatever you do, don’t rule out using some or all cloud based computing options for your business without first investigating if the ‘cloud’ is truly an option for your business.  If you do, you could be costing your business thousands of dollars in potential savings, which in this economy can be the difference between success and failure.
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