COVID-19 coronavirus has certainly imposed additional work upon accountants during the last three months with many people wondering whether this will be the major event that ushers in a wider acceptance by the business community of the financial management contribution that accountants can make to small businesses and medium-sized enterprises.
30th September 2020 is the government’s stated termination date for JobKeeper, boosting cashflow for employers and the prohibition on debt recovery action against borrowers. There is an expectation that banks and other financial institutions will not be as enthusiastic to lend to SMEs in the post 30th September period because of the heavy strains on their finances caused by COVID-19.
Therefore, whilst a lot of work has been done in assisting clients in the various government programs, much more assistance will be required by significant numbers of SMEs if those businesses are going to survive the challenges in the post COVID-19 era.
What are the priorities for accountancy firms as you develop strategies for 2020/21?
- First and foremost, get your own house in order first – you are not much help to your clients if you’re experiencing difficulties.
- Resetting whatever strategies you had 6 months ago for 2020/21 – it’s going to be a whole new ballgame – and it’s only half time!
- Mentor your clients on the cashflow effect to their businesses from the cessation of JobKeeper and boosting cashflow for employers.
- Coronavirus SME Guarantee Loans are scheduled to conclude at 30th September – these loans of up to $250,000 repayable over 3 years at low interest rates are 50% secured by a guarantee by the Australian government and no security is required by the borrower. With the strong expectation that securing funding from banks post 30th September is going to be difficult, it could be very advisable to try and secure these loans prior to that date. The loan application will require a business plan, budgets and cashflow forecast for 3 years in addition to financial accounts.
- It’s important that you have conversations with each of your clients to determine what type of services they would like you to provide to them in this new business environment. I recommend that, if you are prepared to offer business advisory services, you proactively advise your clients that your firm is able to deliver those services to them – don’t understate your position because your clients might think that you’re not interested in providing these services and seek these services elsewhere.
- Review your client’s position relative to the Commercial Tenants Rental Waivers and Deferrals. Advise clients that to utilise these benefits they have to qualify for the JobKeeper payment, even if they do not draw down the subsidy of $1,500 per fortnight per eligible employee.
- Offer to work with your client’s leadership team on the establishment of a strategic plan for 2020/21 and 2021/22 (the Australian government’s Small Business Ombudsman Kate Carnell has indicated that she believes SMEs will encounter significant economic obstacles between now and 31st December 2021). The strategic plan should identify strategies to successfully navigate these challenges.
- Prepare budgets and cashflow forecast for 2020/22 that incorporate the decisions that have been made in the strategic plan, with particular attention to investment in inventory, debtors, and research and development projects.
If you would like to participate in a series of webinars relative to COVID-19 survival, ESS BIZTOOLS and our Affiliates are presenting a weekly one hour webinar held each Friday at 12-noon AEST on a variety of subjects relative to strategies that you could utilise with many of your clients to assist them in their business survival.
You can register for these free webinars at ESS BIZTOOLS’ website – Webinars.
You are invited to visit the ESS BIZTOOLS‘ website – Survival in Difficult Times – Learn More to gain an overview of the “Survival In Difficult Times“ product package that we have developed to assist accountants deliver business advisory services which will contribute to your client’s survival.
There is a special 20% discount available for “For Accountants” readers.
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