The new economic lockdown has left many small business owners feeling the pinch. The pandemic was swift moving and unexpected, and many small businesses were not planned for it. As a result, many small business owners are feeling increasingly worried flow dries up. Keep reading to discover some effective tips to help you preserve your cash flow.
You are probably eligible for government funding
As you probably already know, over sixty-seven billion dollars has been set aside by the Federal Government for small businesses and sole traders. This swift and generous package includes some key initiatives. These are:
- Swift and sizeable income support for sole-traders who have been impacted by COVID-19.
- Wages for trainees and apprentices are subsidized
- Small businesses can now get payments of up to $100,000
- There are even tax incentives being offered for people who invest assets in their businesses.
On top of these federal benefits, the states and territories are also offering financial packages for small businesses. These include tax cuts and waivers, grants, and loans.
An advisor from BDO cautioned small businesses to hurry when taking advantage of these initiatives.
“Certain incentives in the various economic packages will only be available for a short period of time, businesses should consider taking action as soon as practicable,” he says.
“Taxpayers eligible for grants should also ensure that their postal addresses with their respective State Revenue Offices are correct so that appropriate payments can be received as soon as possible.
Don’t be afraid to contact the ATO yourself
If you are undergoing cash-flow issues, do not hesitate to contact the ATO. They can help you find appropriate relief options for your business.
Commissioner of Taxation, Chris Jordan, says the ATO will work “shoulder to shoulder with businesses to assist them through this difficult period and do what we can to ease the pressure”.
“Once you contact us, we’ll tailor a support plan for your needs and circumstances,” he says.
“Support measures could include deferral of some payments, quicker access to GST refunds, and options to enter low interest payment plans for existing or future tax debts.”
These options include:
- An extension of 6 months in which to pay any taxes normally payed though BAS. This includes PAYG, and Fringe Benefits and Income Tax assesments
- Returning your GST refunds monthly instead of quarterly. This is done by making GST reporting monthly.
- Businesses are now allowed to vary March 2020s quarter to 0. They can also claim refunds for the previous two quarters instalments.
- Interest and penalties on tax debts from 23rd January will be cancelled.
- These measures are not automatically applied. You will need to decide which measures will be most appropriate for your business. You will also have to find out if you are eligible for these measures. If you are not sure, you can call ATO’s Emergency Supplies hotline on 1800 806 218.
Hunt down invoices that are unpaid
At the best of times you don’t want to leave any invoices uncollected. You may think that in these difficult times customers might be unwilling to pay their invoices. Instead, you will find that flexibility, concessions and understanding go a long way for your customers. If you are accommodating, you can ensure that all your invoices are paid to you. You might be able to collect partial payments, or even collect the full amount using an instalment plan.
Don’t be shy about sending a friendly reminder email or a quick phone call.
You will be happy to know that your utilities providers are probably offering extensions to payment terms for unpaid bills. Just contact them to see if you qualify for this.
Mortgage and rent respite is available
Mortgage and rent payments are often large expenses for small business owners. Different groups are putting various programs in place to help with this. Adelaide firm Commercial and General is suspending rent for small businesses in its properties for the next 3 months.
“They need us to back them to make sure they’re still here when we get through this,” McClurg says.
“It’s going to take a collective effort to make it happen and it starts with all of us as individuals.”
States have not implemented any mass rent relief programs, but you can ask your landlord what they can do. They might be able to temporarily reduce your rent, pause it for a few weeks, or come up with a payment plan. Just be aware that, in NSW at least, landlords do not have to agree to any kind of rent relief.
The NSW Small Business Commissioner says; “if you have a good relationship with your landlord and you’ve met all the other lease terms, it may be worth trying to negotiate a rent reduction for a specific length of time.
Another great thing to keep in mind is that many banks are offering solutions to mortgage holders in these difficult times. If you own your own house, look into your options. You may be able to pause your mortgage payments for 6 months.
You can reassess your staff structure
You value your employees greatly, and the thought of letting them go can be devastating. Take advantage of programs such as JobKeeper and the $100,000 cash flow boost offered by the Federal Government.
Termination should be a last-ditch measure. If Government assistance does not cut it, you can ask your employees to use up all of their paid leave. You could ask them to take unpaid leave, negotiate temporary wage reduction, or even stand them down with the agreement to rehire them.
- You need to stay compliant with your usual legal obligations at all time. It is very sensible to obtain legal advice to make sure that you are going about things the right way.
Cut down on overheads.
For many small business owners, rent and staff costs make up a sizeable chunk of their overheads. After talking to your utilities companies and landlord you should also reassess your other business expenses. You can clean up your cashflow by looking at your online software and subscription services. Cancel any of these that seem extraneous. You can also go on price comparison websites such as comparethemarket.com to see if you can get a better deal on any of your bills or expenses. If you want to stick with your current services and providers, call them up and ask if they will offer you a deal. You might be pleasantly surprised.
Reconsider your insurance
Many people pay much more than they have to for their insurance. This is because they’ve stuck with the same insurance broker or provider for years. Fortunately, the business insurance market has changed dramatically in the last few years. You can hop onto www.bizcover.com.au and generate a business insurance quote for your business. You have to answer a few short questions and the policy is then delivered to your inbox within minutes. Best of all, Bizcover has a price promise.
Reconsidering your business insurance and switching to a more appropriate policy can potentially save you hundreds if not thousands of dollars a year.
Take out $10,000 from your super
Under a new superannuation scheme by the Federal Government, sole traders undergoing financial strain can access their super early.
You could be eligible if you’re a sole trader and your revenue has been reduced by over 20% since January. Simply apply through the ATO portal on my.gov.au. You can take out $10,000 before June and another $10,000 after.
Pursue new income streams
Many small business owners have found themselves backed into a corner as a result of these unprecedented circumstances. Great entrepreneurs use difficult times as an opportunity to innovate, grow and profit. You can change the direction of your business whilst still complying with government health restrictions. For instance, you could provide new services or manufacture different products.