When your 6-month business loan deferral from the bank comes to an end are you ready?
Is your business entitled to receive JobKeeper but doesn’t qualify for the JobKeeper extension?
When the cashflow assistance for your business stops you need to be ready. By putting some practices in place, you can help make sure your business remains on track.
Initial bank loan deferrals coming to an end
The initial wave of 6-month loan payment deferrals, which the bank granted to support their customers due to the COVID pandemic, comes to an end in September and October. The banks will no doubt be assessing all deferred loans, which include 105,000 business loan deferrals to small and medium businesses.
Many banks will have contacted their customers for their 6-month assessment and for the next steps of support if required. Most banks will be asking for repayments to resume if they can, but for those who cannot, they will work with the customer to look at their loan options.
As part of the assessment banks may request cash flow forecasts for your business as reassurance. We can help provide the banks with peace of mind by assisting you to provide the details they need for their assessment.
You might have had a good last quarter so you’re not eligible to receive the JobKeeper extension. Even if you are entitled to the JobKeeper extension you should be putting processes in place to boost your cashflow for when JobKeeper ends.
Cashflow is more important than ever.
Cashflow boost ends
The cashflow boost stimulus also ends in September 2020. Eligible businesses and not-for-profit (NFP) organisations who employed staff received between $20,000 and $100,000 in cash flow boost amounts when they lodged their activity statements up to the month or quarter of September 2020.
Without this additional cashflow assistance, many businesses will be wondering how they are going to survive.
While the upcoming Federal budget in October may come up with measures to replace some of the schemes coming to an end and help businesses, you need to get your cashflow in order and speak with your advisor as soon as possible.
What can you do?
Depending on your industry there are a number of things you can do.
- Hold your cash.
Cashflow is more important than ever! Prepare a cashflow forecast and make sure you have access to your cash so it’s not tied up e.g. in debtors.
- Perform a business health check so you know where you are at
Know how your business is running and identify any upcoming challenges which may impact your cashflow.
- Create a budget
No one could have budgeted for the COVID pandemic and no one knows what may happen in the future. It’s best to plan now and have a budget in place so you can react to changes in the market and pivot your business if necessary.
- Change your business model
Is there anything else you could be offering your customers or anything you can cut back on? Identifying additional income streams will allow you to mitigate risk.
When was the last time you reviewed your pricing? Are you able to increase your prices?
- Reduce your costs
Can you reduce any of your business costs in labour or raw materials? Have you reviewed overheads to identify areas of the business you can save on costs?
- Operating costs
Evaluate all your expenses and change suppliers if needed.For energy there’s a Business Energy Advice Program (BEAP) available which provides free independent energy advice tailored to your business via consultation with an energy expert. This is an Australian Government initiative in partnership with Australian Business to help SME’s find industry-specific energy savings.
Look at the amount of stock you have on hand is there anything you can reduce?
- Accounts payable
Slow down the payment of creditors and prioritise your costs.
- Accounts Receivable
Collect debts on time, actively engage with your customers, keep open lines of communication and review payment terms and credit limits.