Mackay Goodwin CEO, Domenic Calabretta, shares how you can scale back and reduce overheads to assist your business to make it through these challenging times.
In the last article I wrote for KBB, Calculating your exposure and forecasting cash flow in difficult times, I explained how to calculate whether your business will be able to manage the uncertainty of COVID-19 financially.
With those calculations complete, you should have a good idea how much you need to reduce overheads and how much help your business needs to get through these uncertainties.
There’s a variety of actions you can take to minimise your financial commitments at this time:
Obtain ATO Relief
The ATO has announced several different options to help businesses.
- Defer payments for up to four months – You can request a postponement for income tax, Activity Statements (including PAYG) and FBT and Excise payments.
- PAYG payments for the March 2020 quarter may be varied, and you may also be entitled to claim refunds on the September 2019 and December 2019 quarters.
- To process GST credits more quickly, businesses can change their reporting cycle to monthly.
- You may remit interest and penalties for any tax liabilities incurred after 23 January 2020.
- You could enter into a low-interest loan arrangements with the ATO to pay your outstanding tax.
Further information on ATO relief options can be found here.
Negotiate with your landlord
Along with a raft of other temporary legislative measures, the COVID19 Emergency Lease Legislation was introduced on 25 March. It effectively means that retail and residential tenants are protected from eviction or having their leases and tenancies terminated.
It doesn’t hurt for businesses to also proactively engage with their landlords to find mutually agreeable rent arrangements. Strategies might include reduced or deferred rent.
Does your Insurance Cover you for Coronavirus?
Some business interruption insurance Policies may have coverage for Coronavirus and other infectious diseases. These policies cover loss of income as a result of business disruptions. It is worth checking if your policy may be one of them.
You may also be able to claim on invoices you are unable to collect from customers due to their businesses ceasing trading.
Not all insurance policies are created equal, so read the PDS of yours or speak with your insurance broker to understand what inclusions your policy has.
Reduce Your Overheads
Look at all your commitments and try and trim unnecessary or deferrable costs where you can. You may need to delay planned product launches or infrastructure investments for now, but by doing this, you can influence the length of time your business can cope in the current economic environment.
You may be able to negotiate reductions for subscriptions or software payments, with those companies preferring to keep your business at a reduced rate than lose the income altogether.
We are in uncharted territory, and collectively going through a shared lived experience which makes it much easier to have honest conversations and come to arrangements with suppliers. Your business is not alone in making difficult decisions.
Mackay Goodwin is offering several free advisory activities for businesses who find themselves in trouble. Aside from free webinars, it has also released a downloadable business survival pack. It is also providing an initial free consultation with businesses, and to assist the business community its staff have committed to providing two hours of their day free of charge to affected businesses for the next six months.
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