The past few months have played havoc with the finances of many businesses. The shock of forced business closures, standing down staff or deferring loans took a huge financial and emotional toll on business owners.
This resulted in many holding on to as much cash as they could and throwing themselves and their business into survival mode.
Despite the Federal Government’s cashflow stimulus measures and JobKeeper payments, many business owners remain especially cautious about their activities.
Each state and territory continues to be impacted differently by COVID-19 and, in Western Australia, while lockdown restrictions have been eased for some time, the hard border closure is set to impact many businesses who trade nationally and internationally, with the degree of caution among business owners remaining high.
Clients continue to approach us with the following queries:
- How much money do I have to make each week to remain operational?
- When will I run out of money after JobKeeper ends, if my sales only stay at X?
- I am going to change one aspect of the business as a direct result of the pandemic – will it still be viable?
- I need to have better visibility on the numbers more regularly, rather than just relying on whether I have cash in the bank – what can you do to help me with this?
A lot of businesses utilise their accountant for compliance matters only, such as lodging income tax returns and helping with GST queries when lodging Business Activity Statements. But we should be used for far more than just compliance.
Items we have been assisting our clients with include:
- Transparency over break-even points (how much do you have to sell each week or month to break even?)
- Cash flow projections in both the short and long-term, including factoring in additional borrowings if required (and determining when they may be required)
- Assessing the financial viability with a change of focus in the business (for example, sourcing different products/materials, sale of different products into different markets)
- Assisting the client’s finance team to improve and regulate reporting to the decision-makers
- Strategic direction of the business.
In these times the ability to be nimble and having accurate information at your fingertips could be the difference between business success or failure.
We are here to help. Go to our COVID-19 Resource Centre for further insights to help you and you business during this challenging time.