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5 Tips to Handling The Financial Crisis

If you’re going to eat a shit sandwich – don’t nibble. 

Commit yourself to the fact that this isn’t going to be pleasant, but take some big bites, chew like hell and you can get through it. 

Making hard decisions is… well, hard.  But if you don’t make them soon enough someone will be making them for you (supplier, landlord, tax office, bank etc).  So best be on the front foot.  Here are 5 tips to help you get through this;

1. Talk to your landlord

If you haven’t already talk with your landlord about the rent, can they give you a rent-free period, 50% off etc.  They will be worried about their cash flow too, but if you can work together everyone can be better off.  The bank's are giving loan repayment holidays so this should give your landlord a break from making their repayments - so they should be able to pass this on to you.

Giving you a few months free or discounted rent is cheaper for them, then you going broke, and them having an empty building and trying to find a new tenant and having to offer them a rent free period.

2. Talk to your bank

The big banks have all released business loan repayment deferrals for up to 6 months.  This is a huge deal. So get onto your banker and get this started.

In addition to that all financial institutions have financial hardship provisions.  These provisions are there for you to use, so use them.  If this isn’t hardship, I don’t know what is.

There are additional benefits you can get such as waiving merchant terminal fees, so it's really important to speak to your banker and get everything you can.

3. Talk to your staff

You’ve probably already done this but keep talking with them. They’ll be worried about their income, as you are yours, so keep the communication open.  Be honest, be empathetic – we’re all going through this. If you can reduce hours rather than letting them go, try that. If not, see if you can stand them down under the Fairwork act.  

If you can't stand them down, let them go, you don’t want them doing hours you can’t afford to pay. Not only is it morally reprehensible it’s illegal. 

4. Seek Government Financial Assistance

All levels of government have announced stimulus plans, and you may be eligible for one or more of them. 

You will have heard of the Federal Government stimulus package.

The big one for most small business is the 100% PAYGW cash back.  This means business with turnover of less than $50mil and who were registered for PAYG Withholding on 12 March, can access a minimum of $20,000 and up to a maximum $100,000.  This is made via a number of payments over the next 6 months, so get and keep your BAS up to date to access this.

This will start after you lodge the March BAS. We haven’t got legislation yet, but from how it reads at the moment, so we're not 100% on the details, but this amount will be applied to your ATO account, and if there is a net credit to you, they will refund that amount within 14 days.  

In addition to this, the government is going to provide a guarantee to banks so they can lend to Small and Medium business up to $250,000 unsecured.  More details will be released on Monday 24th March so we'll update this post then.

In addition to all this the ATO is providing the following assistance;

  • ATO Payment deferrals
  • Remitting interest & penalties
  • Low interest payment plan

These don’t come automatically so if need be get in touch with them on 1800 806 218 and see what assistance you can get to help with your cash flow. From the experience to date it only takes a few minutes and they are granting payment deferrals for up to 4 months.

There’s more information here

Other levels of government have released their own packages, which you can find here;

Queensland

Payroll tax deferrals, job support loans of up to $250,000 interest free for 12 months (more details yet to be announced but you can register your interest with QRIDA here )

New South Wales

Payroll tax holidays, plus waiver of various fees for bars, restaurants, cafes etc.

Victoria 

Payroll tax refunds, waiving of liquor licensing fees and rent discounts for council owned properties.

City of Melbourne

Has released their own including discounted rent for council owned properties 

5. Talk to your accountant

If they haven’t contacted you yet, get in touch with them, or find another one to help you (like umm us). 

Work through the issues, get their input.  If you’re looking down the barrel of closure, there are ways to protect yourself from hemorrhaging more cash.  

This may involve formal insolvency, but again, it’s better that you make this decision then doing nothing and someone eventually doing this for you.  The insolvency process can assist in an orderly exit and protect what you’ve got left.

To help business owners through this we’re offering free 30-minute phone calls to help you work out a plan.  So book one now and take the first step.