TIPS TO ASSIST BUSINESSES TO PREPARE FOR IMPACT OF COVID-19As you are aware, our business landscape is rapidly changing as the impacts of COVID-19 expand. Not only are we concerned for the personal health (of business owners and employees), but also the direct commercial impacts of either Government restrictions, supply chain restrictions or the overall economic slowdown. In short, COVID-19 will impact many businesses, which could place their immediate future in serious jeopardy, and the duration of this impact is currently unknown. As part of any business risk management plan, there are numerous actions you should consider taking now, to prepare your business for COVID-19 |
Consider the impacts on your businessIt is an important planning tool to try and identify any potential impacts on your business by having early discussions with your staff, key suppliers and key customers. These stakeholders should be able to give you feedback on how COVID-19 will impact them, and in turn, how it will likely impact the operation of your business. Critical areas to consider include the following:
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Consider updating your budgeting analysis with new assumptionsThe assumptions you used to produce your current budgeted financials are very likely no longer accurate, given the landscape has changed for all businesses in the last 30 days or so. It is advisable to re-work your budgeting forecasts, even if this is done for shorter periods (ie. monthly rather than quarterly), given how rapid changes are happening. It is also worth considering the inclusion of a range of possible previously "unthinkable scenarios", such as: a dramatic decline in sales over the next three to six months, or existing suppliers being unavailable to you (for an undefined period of time) and needing to find suitable replacements . |
Consider how to improve cash flowWhen you have completed the re-working of your budgets and determining the forecasted financial health of your business (including your cash reserves), if you have identified that your cash flow position is going to be critically impacted, you will need to act now to help improve the cash flows as soon as possible. Start by preparing a cash flow forecast, including frequently updating the forecast as the financial impacts of COVID-19 unfold (ie. weekly). This should give you some predictive forewarning of any cash flow problems so you can act fast to address them. Other helpful tips to improve your cash flow may appear untraditional and radical, but these are unchartered waters which may force us to consider normally unusual actions. Significant areas of your business to review will include the following: Manage stock:
Manage debtors:
Manage creditors:
Review your borrowings
You should always consider any major decisions with your Accountants and Advisers to confirm whether any actions may be detrimental to your business in the recovery stage. |
Consider whether your business may be entitled to recent Government stimulus concessionsSince 12 March 2020, the Federal and State Governments have released a large number of concessions and stimulus measures to assist businesses during the serious economic downturn projected to occur as a result of the COVID-19 pandemic. We recommend you consider whether some of the following concessions can apply to your business:
We have produced numerous Tax Alerts to help explain these various measures and can be found on the Latest News Page of our website – click here
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Seek any professional advice earlyDuring extremely challenging times, regularly examine the following:
Any negative responses to these questions should prompt you to immediately seek professional advice and together review the financial health of your business. |
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