With Australia’s heightened level of precaution concerning the COVID-19 (coronavirus), we want to emphasise that we are here to support and guide you through this difficult time of uncertainty. We have prepared the following list of questions and considerations which should assist you with developing COVID-19 businesses strategies limiting the impact and disruption occurring from the virus spread.
By considering the following COVID-19 businesses strategies, you will be better prepared to address the situation as it evolves.
Management and business plans
Clients should take the time to think about their operation and the continuity of their business at various stages of this outbreak, with the likely scenarios being:
- Best case – limited impact to usual trading conditions
- Worst case – potentially forced closure periods as a result of the virus spreading and changes in Government policies
- Likely – some impact to trading. Reduced activity and revenue, increased costs to meet social distancing requirements, disruption to supply chains, employees inability to work due to third party closures, inefficiencies in productivity if a need to work remotely, etc.
At each stage, there should be a defined set of actions you are prepared to implement and communicate with appropriate people in your organisation to addressing the following items. We also suggest that you try not to focus on all the possibilities (as there are too many), just focus on the plan.
Staffing & Human Resources
For most employers, your staff’s health and safety must be your major focus. If an employee contracts the virus, you will need to address the following questions:
- Will you require to have everyone off-site for a period of time?
- Will your employees be willing to come to work if someone is diagnosed?
If in a likely scenario that stricter distancing requirements are enforced, consider:
- Rostering your workforce into teams, where one team is in the workplace and the other is working remotely, alternating weeks
- Physically distancing people in the workplace, especially if they have dedicated workspaces
- Limiting in-house meetings and investigate alternatives
- If a service-based industry, changing face to face appointments to phone or video conferences
- What your obligations are under the Fair Work Act with regards to leave obligations, self-isolation and return to work policies
- What rights you have as an employer to request reduced staff hours or to work from home.
- Whether you are enforcing a ban on domestic work-related travel
- If you will be cancelling work related functions, staff networking events and conferences
- Sending ongoing reminders regarding hygiene practices in the workplace and ask staff to clean down their areas at the end each day
- Increasing cleaning of the workplace to promote a healthy and clean environment.
Engaging early with your Human Resources team will also help determine an action plan for any of the above scenarios and assist with your COVID-19 businesses strategies.
Cashflow & business management
Questions for consideration are:
- What level of cash position should you maintain to ensure operations continue?
- What is a base minimum you need to cover wages and other overheads to keep doors open?
We recommend that you consider all avenues possible to increase cash reserves now, as building up reserves early in the cycle will ensure that your business can ride out uncertain times for longer. This includes:
- Following up on outstanding monies that are owed to your business. As the economy slows, businesses will traditionally withhold payments from each other.
- Engaging early with your bank to arrange repayment deferrals, interest free periods or conversion to interest only loans. Most banks have released their interim COVID-19 financial hardship plan (expect more to come).
- Considering if your business requires an overdraft or other facility to help cover expenses during difficult times.
- Engaging with your landlord (if relevant) to request rent relief or negotiate other terms due to a decrease in trading conditions.
- Assessing which creditors or outstanding bills are vital to ensure operations continue and which you may be able to extend with payment plans. Be careful here, as good relationships with suppliers may be key to your ongoing business.
- Contacting your suppliers early to arrange payment terms to prevent forced collections.
- Reviewing overheads and reduce any discretionary expenditure. This may include advertising expenditure, parking and travel costs, phone services provided to staff where an allowance may be more suitable, meal and entertainment expenditure, etc.
- Reviewing assets that you have at hand and consider their viability in the business. Are there any that can be sold? Do you have any equipment on hire that you can return? Are vehicle upgrades a necessity or is limiting vehicles that are provided to staff a possibility to reduce unnecessary spending.
- Where applicable, reviewing trade terms with clients and consider logistic and supply chain delays. Will this carry costs to your business or can you extend the terms with your clients?
Look at this as a good a time to do some cashflow house-keeping using the above items to get you started. Its also a good time to give some thought to your forecasts and future cashflow modelling of the various scenarios. If you are looking for relief or credit assistance from banks they will likely require this in coming months.
If in the unfortunate event business conditions do deteriorate, having an understanding workforce will be key to helping your business ride uncertain times. We know its not pleasant and a last resort, but you should also consider your rights and positions if:
- You need to ask staff to work reduced hours;
- You need to ask staff to stand down for a period of time;
- You plan to ask staff to take leave; or
- Positions become redundant.
Again, please refer to Fair Work Australia or your HR adviser for further advice.
Complete an IT and computer systems audit of your workforce in preparation for the possibility of the need to work remotely. Things to consider:
- Types of IT hardware (computers/laptops, scanners) already in place for work and at home.
- Request details of your employees’ home internet speeds and data limits.
- Determine if staff have anti-virus protections and necessary peripherals eg monitors/cameras to assist in maintaining efficiency and contact whilst working remotely.
- Identify who your key IT person is, both internally and externally.
- Assess if a move to cloud-based systems may be beneficial or necessary for the business, including email systems, accounting systems and key documents.
- If data is key to your business (and these days it is for most), review your back-up and server/data redundancy procedures:
- How often do back-ups occur?
- Do you have off-site back-ups?
- Do you regularly test your back-ups?
If staff do need to work remotely, consider how this will be implemented and consult with your IT provider to assess and address this early. Contemplate the following in this regard:
- Does your current infrastructure have the ability and capacity to carry a remote workforce?
The impact on productivity with a remote workforce and how best to extract efficiencies. This may mean, some staff may come into the workplace and others work remotely.
If you need any IT or computer hardware, supply chains are presently strained. Consider what you absolutely need and don’t need.
- How will your phone systems operate if you have a reception or call centre?
- Are online phone conferencing, group messaging and web calling providers required?
- Do you have an IT back-up crew if your current provider is impacted?
It is wise to review and determine an implementation plan. A move to a remote workforce will take time away from staff and take time for IT personnel to implement. Run a trial before full implementation, if you can.
Compliance & Government assistance
We are still waiting on the release of the Government’s full assistance measures to be released. Below are the current key assistance items to note:
- The ATO are allowing deferrals for BAS payment obligations.
- Where eligible, businesses will be allowed to vary their PAYG Instalments to nil and, on application, obtain refunds for the September and December 2019 quarters already paid which will provide cashflow relief.
- Employers with turnover under $50 million will receive tax free payments/credits against their PAYG/Withholding obligations, therefore decreasing March and June 2020 quarterly BAS payments, or providing additional refunds where applicable.
- There will also be wage subsidies available to be applied for businesses who have staff of fewer than 20 employees and employ approved apprentices/trainees.
- The immediate asset write-off limit has increased from $30,000 to $150,000.
- The NSW Government will waive payroll tax for businesses with payroll up to $10 million for three months (April, May, June 2020).
- Payroll tax threshold for 2020-2021 in NSW has been raised to $1 million.
- There will also be a waiver of a range of fees and charges for small businesses in the hospitality trade industries.
We will continue to update you on any further relief measures as and when they become available.
Further information & assistance
By considering the above points and acting early, your business will be in the best position possible.
“Before anything else, preparation is the key to success.”
Alexander Graham Bell
If you find that you are experiencing difficulties due to the impact of COVID-19 or would like to discuss any of the above points, please do not hesitate to contact us. By doing so early, we will then be able to:
- Assist you with cashflow management plans.
- Engage with the ATO on your behalf to access their stimulus measures, including payment of deferrals and potential tax refunds.
- Be there to guide you through these unprecedented times.
In the meantime, read HLB Mann Judd’s update on the Stimulus Package which will also assist your COVID-19 businesses strategies .
For more information regarding Australian workplace laws, please refer to the Fair Work Ombudsman.
We too have considered all the above here at HLB Mann Judd Wollongong and have put in place risk minimisation strategies so that we can continue to support our clients with total commitment during this time. Considering COVID-19 businesses strategies is of the upmost importance. Our firm and staff remain fully operational and you can expect continued and responsive support from the team.