Covid Client Economic update 2020
Given the recent uncertain times in the economy, some businesses are starting to feel the impact of the public panic. The Covid virus has met some controversy that it is only flu like symptoms for the healthy, it is not as deadly as the SARS, etc. While it may not be as dangerous to the healthy, we all need to practice appropriate measures to help protect our elderly, fathers, mothers, grandparents, and the frail, our brothers, sisters, cousins and friends with respiratory issues such as asthma, heart disease, etc.
How is the Covid affecting businesses?
Looking past the health issues, the fear, uncertainty and panic is starting to take its toll on the business community. Businesses that are already starting to feel the pinch are:
- Travel & accommodation,
- playgrounds and recreation,
- retail and shopfront businesses,
- our share market and
- our Australian dollar
Reasons for the drop in businesses is due to amongst other things
- people unwilling to go into public places
- Government limitations, restrictions and guidelines,
- Australians now watching their spending due to fears of a major economic slow down
What will Alliance Accounting do to assist you
We have implemented an internal Covid monitoring system to track its progress so that we may better understand the impact the Covid may have on your business and the economy.
We have been and are aiming to get in contact with many of our clients to discuss their situation.
We emphasise that we are here to help our clients in this time. If your business is affected, please contact us.
It is important to understand that financial help may not be enough to help your business survive. It is important to plan, implement, review and plan again as business conditions change daily.
The old adage of cash is king can not be more true in these circumstances. Those that start planning and preparing will survive the economic instability and will come out stronger once the economy stabilises as your competitors start to collapse leading to a market with hopefully, greater demand than supply. We advise that you:
- Start writing a plan in preparation for what could happen. This plan could be put in place for now, and future times of uncertainty. When times get tough, it will be easier to enact a plan which your thought through when you had a clearer mind rather than trying to come up with ideas when in panic. Tips for the plan include:
- Set clear and specific targets that define when you would taken actions. For example, “if our bank drops below $xx, we will…”, “if we lose XX number of clients, we will…”
- Set clear and specific actions, for example “we will reduce staff hours by x hours, We will stop using 2 casual workers, we will ask for a rental decrease or holiday, Etc.
- Plans such as these are incredibly helpful for many scenarios. While at it, consider plans for any future events, for example, floods, fires, power outages, etc.
- Review your expenses. When was the last time you reviewed your electricity costs, your phone bills, your insurances, etc.
- Consider what unnecessary spending you could cut back
- Consider the impact this could have on your suppliers, your customers and your staff and how it may impact you
- Revisit your marketing. At this time, with competitors looking to cut costs, they may switch of their marketing to their detriment. After having considered what impact an economic slowdown could have on your customers, think about what customers could be looking for and how you could attract them. If competitors start collapsing, how are clients going to find you?
Lets support each other. We have many clients who are marketers, advertisers, printers, mortgage brokers, real estate, IT, tradies, etc. If you have a need for a service, feel free to reach out to us for the details of one of our trusted clients.
Details of assistance from governments and external bodies
In a recent email, we mentioned assistance that the government has announced thus far. We will quickly recap on these:
- 50% refund on PAYG Withholding between January to June, automatically credited to your ATO account with a minimum of $2,000 up to $25,000. This applies to the taxes withheld on wages that are declared on BAS’s.
- Increase of immediate write off on assets purchased from $30,000 to $150,000
- 50% immediate deductions on assets above $150,000
- Three month payroll tax holiday from the NSW OSR
- 50% wage subsidy on apprentice and trainee wages until September, up to $7,000 per quarter
- $750 one off payment to social security, veterans and income support recipients
- Ability to defer ATO payment due dates by upto four months – by application only.
- Ability to change from quarterly to monthly BAS lodgements to even out large BAS payments
- ATO remitting interest and penalties applied after 23 January – by application
Note that there could be additional criteria for the above, however, we have kept them brief for your easy reading.
Latest updates and assistance
- RBA has cut rates by 0.25% in an emergency meeting this week. Many banks have passed on the rate cut in one way or another.
- Government and banks have now worked out to offer a 3-6 month loan repayment holiday for businesses and home owners on business loans, equipment finance and home loans.
- Banks are allowing the opportunity to convert your loans to interest only to reduce your monthly loan repayments
- Some Banks have increased interest income on term deposits.
- Some banks have decreased their fixed rate interest rates to low 2%
- Be wary of scams from emails, texts and door knockers providing payment or assistance.
- Restrictions on gatherings over 500
- Restrictions on indoor gatherings of 100
- Indoor gatherings require that each attendee including staff have a minimum of 4 square meters of floor space
It may be worthwhile looking at taking advantage of some of these offers in order to save cash from now. Waiting till you are in crisis may be too late.
Proposed assistance – details to come
- Assistance to tenants struggling to pay rent
- Potential further stimulus incentives from both state and federal governments.
We express the importance to start preparing and planning! The Government and banks never hand out free money unless they believe there is some urgency, we ask that you consider the same level of urgency in your business.
Stay safe, all the best, and remember, we are here for you.