With JobKeeper coming to an end on 28 March 2021, businesses that qualified for phase three of the support scheme now face the reality of surviving without financial assistance.
This can be a frightening reality for businesses that have not recovered to pre-COVID performance and have employees that rely upon them.
Communicate with your Employees
It is important that you communicate with employees prior to the end of JobKeeper. As of 28 March, employees’ wages will revert back to their pre-JobKeeper levels, so we recommend that you notify your employees of this – particularly where the amount received under JobKeeper may be different than the employee’s regular pay rate.
Submit your March monthly business declaration to the ATO. You do not have to take any further specific action with the ATO, however you do need to make sure you complete your final monthly business declaration for March by 14 April 2021.
Cashflow is more important than ever!
For any business to survive, cash flow is undeniably the single most important factor determining its propensity for success or failure. Run out and it’s game over! JobKeeper has provided a boost to cash flow to affected businesses since April 2020, so once this stops there will be a gap in some businesses cash flow going forward.
To ensure you have the ability to survive without financial assistance, it is useful to prepare a budget and cash flow projection. Looking at your projected figures will give you a better understanding of where you think you will be and what your breakeven level of sales are.
Don’t have a budget and cashflow projection? Work through our budget templates:
Work on your Cash Conversion Cycle
Most businesses will have some aspect of each of these elements:
During this cycle, cash is basically tied up in your business. If you want to be able to operate your business in a downturn situation, then your access to cash will be imperative. You are going to need to minimise the amount of time cash is tied up.
Most of the ways you can make improvements fall into 3 general areas:
- Speed things up / shorten cycle times
- Eliminate mistakes
- Change the business mode
Work through this Cash Acceleration Strategies worksheet to develop ways in which you can accelerate your cashflow:
The Power of One
Business owners can tweak the 7 main financial levers available to them to improve cash and returns in the business:
- Price: you can increase the price
- Volume: sell more at the same price
- Cost of goods sold (COGS / direct costs): reduce the price you pay for raw materials and direct labour
- Operating expenses: reduce you operating costs
- Accounts Receivable: you can collect from your debtors faster
- Inventory / Work in progress: you can reduce the amount of stock you have on hand
- Accounts payable: you can slow down the payment of creditors
Work through our Power of One worksheet to see what a 1% or 1 day adjustment would mean to the overall cashflow in your business:
Power of One Worksheet
How can Walsh Accountants help you?
Now more than ever, the team at Walsh Accountants are positioning ourselves to help business owners prepare for what is ahead of them. You can put yourself in a strong position to flourish, it’s just going to take some forethought and planning to prepare yourself.
As always, our team are ready to assist you should you need help to work through any of the resources we share with you. If you require assistance or would like to talk through anything, please do not hesitate to contact our office and speak with your accountant.