With JobKeeper coming to an end on 28 March, businesses across Australia will need to consider the financial impact of the change. Although many businesses and sectors have been impacted by JobKeeper, we know that thinking ahead for smaller businesses across the hospitality businesses will be key to their success of transitioning away from the benefit that JobKeeper provided through the pandemic.
Planning here is absolutely key to making sure that your business is in a good financial position to address the change that is coming, and considering the impact that the end of JobKeeper will have on your cashflow for at least the next six months is a must if you want to ready your business for the additional expenses it may incur.
Considering your income, expenses, salary liabilities and tax positions are essential, as moving into April 2021 with a clear picture of your business health will assist you to make healthy financial decisions.
If you find that you’re likely to see a negative cashflow position over that six month period, then slimming your workforce to improve your cash flow is an option, but usually, it’s not an option that many like to take. We think it’s a situation that you can avoid by carefully considering your business position with your accountant and business advisors.
To start, here are a few examples that your business could call on to help build that positive cash flow position:
1. Understand your stock – regular stock takes (and a detailed stock take before 28 March) could lead to the discovery of surprisingly large cash savings. By understanding your stock levels, best selling products, and stock loss, you can make informed decisions around what stock you can remove from your regular orders, and where you might look to increase your orders to accommodate for your best selling products. Understanding exactly where wastage is occurring, and building methods to cut that waste will also save your business money.
2. Temporarily reduce staff hours – if you have loyal employees they may be willing to accept a temporary reduction in their hours to help the business through the next few months. No, this isn’t ideal, and not an option to be taken lightly, but if your employees value their work, they may be willing to help out.
3. Negotiate rent relief from your landlord.
4. Talk to your bank manager and consider what facilities might be available to assist you in the short term to improve your business’s cash flow.
5. Apply to the ATO to vary your PAYG, moving from monthly to quarterly installments on a temporary basis.
6. Discuss with your financial advisors whether now might the right time to provide a personal equity injection into the business, or consider whether there may be investors that are willing to do the same.
With the many different options available, and the need to fully understand your position, talking to your accountant and financial advisor is an absolute must. If you’d like to discuss your options further, we’re here when you need us.