Business Action Plan Checklist

We are getting inundated with clients looking for help as the COVID-19 pandemic tracks towards being the greatest social upheaval the world has seen since World War II. The updates and announcements are coming at a breakneck speed.

It’s not easy to stay calm at this time but we are here to help you and we will continue to post regular updates.

It’s become clear that some industries will be more severely impacted than others and the most common question we are getting from clients is, “What do we do next?” In response, we have put together an action plan checklist.

It is vital that you act quickly and decisively and work your way through this action plan. There are cash incentives, loans and tax payment deferral strategies to consider. Of course, feel free to contact us by phone or email as face to face meetings are no longer available.

Here are practical steps to consider right now:

Get Your Records Up To Date

This is priority one. Up to date, accurate financial records allow us to work together to make informed business decisions. By preparing interim financial statements to March 31, 2020 we can:

  1. Look at where you stand from a year-end tax point of view
  2. Finalise your March BAS and look at any potential variations to minimise your cash outflows
  3. The interim statements will help us calculate salaries to pay in the June quarter. The PAYG component will impact on your entitlement to government stimulus payments
  4. Know your accounts receivable, accounts payable and current bank balances

Build a Cash Flow Forecast for the next 12 months and keep updating it at least every month as you get more information about revenue and costs.

Cash flow is the lifeblood of any business and it just became critical. The main reason most business owners prepare a cash flow forecast is to raise finance but right now it needs to identify how much money you will need and when. The forecast will project your bank balance at the end of every month.

Whenever you prepare a cash flow budget you have to make a number of key assumptions. These assumptions should be realistic and supported by research, available data plus known facts such as fixed costs (rent, and forward contracts).  The uncertainty around the duration of the crisis makes it hard to project revenue and costs but you need to do your best. For many businesses, revenue may be zero for months to come so identifying your Government entitlements under the stimulus packages is a key item on this checklist. 

The information in your cash flow budget is designed to:

  • forecast your likely cash position at the end of each month,
  • identify the timing of potential cash shortages,
  • plan your tax payments; and
  • plan for any major capital expenditure (instant asset write-off incentive).

To produce your cash flow statement, the starting point is to extract last year’s cash flow report from your accounting software. Project your likely receipts including any government stimulus payments. This won’t be easy but depending on your industry, you might need to work on a decrease of between 25% and 60% or possibly more, of sales.

Work through your fixed costs (rent, insurances, subscriptions, loan and lease repayments etc.) and then consider your staff requirements and calculate your anticipated wages. Next, plug in your variable costs like direct materials, stock, commissions, freight etc. 

A cash flow budget template is available to download from the resources tab of our website.

Government Stimulus Entitlements - Cash Boost

The Government is providing up to $100,000 to eligible small and medium-sized businesses and not-for-profits (including charities) that employ people, with a minimum payment of $20,000. Employers with aggregated annual turnover of less than $50m will receive a payment equal to 100 per cent of the PAYG tax withheld on salary and wages in the March and June quarters with the maximum payment being $50,000. The minimum payment is $10,000.

An additional payment will also be paid in respect of the July to September 2020 quarter. This means that eligible entities will receive between $20,000 and $100,000 when you combine both payments. The cash boost is a tax free payment to employers and is automatically calculated by the Australian Taxation Office (ATO) based on Business Activity Statements lodged. There are no new forms requi

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