Uncertain Times
There is so much uncertainty at the moment and so much information, so I will keep this brief.
During Covid, there have been a number of announcements to support businesses, including:
* JobKeeper, Cashflow Boost, lease relief scheme and various grants for businesses
* Moratorium on evictions and changes to lease terms with respect to lease arrangements
* Statutory demand threshold increased to $20,000 and time to comply, extended to 6 months
* Bankruptcy demand (called a creditors petition) threshold increased to $20,000 and time to comply with a bankruptcy notice extended to 6 months
* Moratorium on insolvent trading provisions, for debts incurred in the ordinary course but with an obligation to still meet directors duties
* ATO support for businesses through payment plans and deferral of payments
We have recently had further announcements extending JobKeeper until March 2021 and the moratorium regarding lease
arrangements until the end of 2020. We will likely see further announcements regarding statutory demands and provisions
regarding management of solvency issues shortly, however this may require further disclosures or the business owners seeking
professional guidance. It is also likely in the not too distant future, moratoriums will end or be wound back.
Tips
Our top 7 tips for the moment:
* Make sure you get the right help – check the qualifications and experience of the firm or person and make sure it is in financial advisory, restructuring or insolvency (if you are not sure, ask for help to find the right person)
* If you understand your business, make sure you are updating your forecasts and financial positions now, so you can realistically see what is likely to occur over the next 3 to 6 to 12 months. Then stress test them – flex and stress test the plans – talk about a change in products, services, demand, suppliers, marketing or customers?
* If you find it difficult to set strategy, understand financials, or do forecasts, then seek some help but focus on the priority issues (always love a good list!)
* Understand your working capital – how are your debtors, creditors and stock turnover in your business?
* Seek help early – I have specialised in restructuring and solvency since the late 80’s and if you leave it too late, you will have less options
* Communication is key to working out solutions and avoiding further issues (or cost!)
* Take it easy – a lot of businesses and people are feeling overwhelmed, so look after yourself and talk to someone you trust. This time will pass and you need to look after all your parts and pieces!
* Make sure you get the right help – check the qualifications and experience of the firm or person and make sure it is in financial advisory, restructuring or insolvency (if you are not sure, ask for help to find the right person)
* If you understand your business, make sure you are updating your forecasts and financial positions now, so you can realistically see what is likely to occur over the next 3 to 6 to 12 months. Then stress test them – flex and stress test the plans – talk about a change in products, services, demand, suppliers, marketing or customers?
* If you find it difficult to set strategy, understand financials, or do forecasts, then seek some help but focus on the priority issues (always love a good list!)
* Understand your working capital – how are your debtors, creditors and stock turnover in your business?
* Seek help early – I have specialised in restructuring and solvency since the late 80’s and if you leave it too late, you will have less options
* Communication is key to working out solutions and avoiding further issues (or cost!)
* Take it easy – a lot of businesses and people are feeling overwhelmed, so look after yourself and talk to someone you trust. This time will pass and you need to look after all your parts and pieces!
Our next blog will be on developing a simple working strategy… so stay tuned.
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