The first of July marks the beginning of a new financial year once again. A date to review, refine and reset. A date to plan and prepare your business for the twelve months ahead.
The unexpected challenges COVID-19 brought to businesses in 2020 may have you on the back foot this year. That’s understandable. Nevertheless, with FY20 all wrapped up, now is the optimum time to get a handle on your financial situation and set your business up for success this year.
Prepare your business for the new financial year in Australia
Take advantage of the COVID-19 relief programs
The Australian government is currently offering a series of relief packages to assist eligible business during the coronavirus crisis. Be across each subsidy and determine whether your business can take advantage of these allowances:
Boost Cash Flow: The ATO can provide tax-free cash flow up to $100,000 for eligible small to medium businesses. If your business is eligible, it will be delivered through credits in the activity statement system after a BAS is lodged.
Instant Asset Write Off: Until 31 December 2020, the threshold and eligibility for this deduction has been expanded to $150,000 so more businesses can utilise it. Check if your business can claim this.
Business investment: If your business has an aggregated turnover of less than $500 million, you can accelerate depreciation deductions on the purchase of certain new depreciable assets.
JobKeeper: This temporary subsidy is provided to eligible employers so they can continue to pay their eligible employees throughout the crisis. See if your business qualifies and apply for this assistance using Business Portal (using myGovID).
Seek Support: If you find you are having difficulty meeting your tax obligations, talk to the ATO in advance about a payment plan. Or better yet, trust a qualified tax professional (like us) who can do this on your behalf whilst you give other areas of your business attention.
Get organised! Take a deep dive into your outgoing bills and manage them
Understanding your company’s financial position is a salient step in finding savings. In fact, it’s a business advantage. If you are on top of your business’ performance and hitting all your payment deadlines and tax obligations, you are in great stead to manage your outgoing bills too. Ask yourself:
- Where does my business spend money?
- How much is my business paying in fees or interest?
- What recurring payments does it have?
If you are scratching your head at these questions, this shows you are yet to drill down into the details of your day to day finances. As such, an opportunity to save money could await. Dexterous’ skilled team of accounting professionals can establish an effective and efficient process for your business so you can have your financial position at your fingertips. Ask us how.
Forecast your cash flow
During economic uncertainty, it can be challenging to forecast your cash flow. After all, conditions and restrictions are changing quickly and unexpectedly from day to day. Ensure you prepare cash flow projections at frequent intervals and keep a close eye on your expenses, overheads, and inventory. If your projections indicate you have shortages on the horizon, plan accordingly.
Consider shortening or changing your business’ payment terms. Only pay your own obligations on the due date (and not before). Lastly, chase up your unpaid invoices (or engage an accountant to take charge of your collections for you).
Finally, if you’re receiving jobkeeper make sure you forecast with (and without) these amounts present as they can materially affect your cash position.
Safeguarding the business against future threats
Recessions happen. The truth is, the best economic experts find it very difficult to predict them, regardless of what the media informs you. The best thing you can do to safeguard your business against a recession is to plan for one. Therefore, take the time to outline a business strategy (including a continuity plan) with a solid SWOT analysis and effective marketing plan that capitalises on your competitive advantage. It could mean less “thinking on your feet”, in favour of activating “Plan B”, when the economic environment acts erratically.
Save time and money – talk with an expert
Don’t wait to get to know your business better. If any of the above feels a huge stretch for your business, ask for help. Engage the skills of a professional accountant with one, or all, of these tasks.
From harnessing technology to simplify systems, to completely managing your day to day finance whilst you focus on other areas of your business — Dexterous Group is here to support you grow your business. Call us on (02) 9167 8880 or email firstname.lastname@example.org to find out more about how we can help.