Preparing and Responding
Recovering and Creating ValueYour short term cash flow
As you deal with COVID-19 it's important to focus on your cash position.
What you need to do:
- Prepare a cash flow forecast to help identify potential funding needs and assist in your discussions with your financiers, suppliers and other stakeholders.
Your eligibility for Government support
Has your business accessed the Government support available?
ATO and Federal government
The ATO is offering various support measures to support businesses including payment deferrals and remission of interest and penalties.
Refer to their website for more information and consult your tax agent and accountant.
State Revenue offices
State Revenue Offices are offering various payroll tax and other support measures to businesseses. These measures are not harmonised and you should consult your tax agent for further details.
State based support and grants have become available in recent weeks so if you applied for assistance a few weeks ago there may be new programs you were not aware of (including bank lending programs) – it’s worthwhile to review this now.
Financiers
Preparing a cash flow forecast will help identify potential funding needs and assist in your discussions with your financier to fast track any application.
Our Guidance on tax obligations and relief for businesses affected by COVID-19 website also includes a summary table of eligibility requirements for you to quickly review stimulus measures you may qualify for.
Your stakeholders and creditors
Given the significant uncertainty around revenue and cash collection, a sharp focus on managing and negotiating with key creditors is critical to manage timing of payments.
What you need to do:
- Identify creditor categories (eg. landlords, ATO, financiers, employees, supliers etc.) - are their opportunities to reduce, defer, negotiate or stop incurring these liabilities?
Communication
It goes without saying that during COVID-19 its ciritcal that you focus on your communication with key stakeholders to your business operations.
What you need to do:
- Establish a communication plan to keep all key stakeholders informed of progress.
- Maintain an action log and allocate who is responsible for tasks such as recording (and keeping files) of calls, emails, meetings with key stakeholders and what has been agreed.
- Prepare a document covering these key issues and actions, to share with a select internal group and update this document regularly.
Director obligations
There were new changes recently announced to Insolvency laws commencing on 25 March 2020.
The elements of the package (applicable for the next 6 months from enactment) are:
- Temporary relief for directors from any personal liability for trading while insolvent – note this does not absolve directors of general duties to act reasonably and in good faith;
- Temporary flexibility in the Corporations Act 2001 to deal with unforeseen events that arise as a result of the COVID-19 health crisis;
- Temporary increase in the threshold at which creditors can issue a statutory demand (from $2k to $20k) and the time companies have to respond to statutory demands they receive (from 21 days to six months); and
- Similar changes for bankruptcy (from $5k to $20k and 21 days to six months).
Refer to this fact sheet for more information.
Additionally, the ATO may support some businesses via withholding enforcement actions including Director Penalty Notices (which apply to PAYG withholding, superannuation, and since 1 April 2020, GST amounts) and wind-ups during this period.
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