Answer to Question #255791 in Management for ikey

Question

supposed you named your merchandise business #WeHealAsOne Drug Store and operated it in your community, how will you keep your business running during the COVID-19 pandemic?

Answer 1

Understand your current financial position

It’s essential to make informed decisions about your business based on your current financial position. Pending restrictions imposed by government, your ability to trade through this period, pay outstanding debts, keep employees or meet existing leasing or loan repayments will be determined by your financial position. Contact your accountant to discuss the various options which may be available and make a plan as to what you need to do to minimise the impact on your business. Cash flow is critical, especially if your existing income and trade has been significantly disrupted by COVID-19.

2. Check your eligibility for government assistance

The Australian Government has announced several stimulus packages to help business owners manage the disruptions to their business. For sole traders, this includes access to the JobSeeker Payment, which now includes a coronavirus supplement payment and an increase in the income test for partners to $79,762 to provide greater access to support.

The Western Australian Government has also announced a relief package which may assist businesses that employ staff.

3. Contact your bank and insurer

We recommend talking to your bank’s hardship team if you would like to discuss the options available if you need relief from any personal mortgages or loans. Visit the Australian Banking Association website for a list of hardship contacts for each bank.

On 2 April 2020, the Australian Competition & Consumer Commission (ACCC) granted interim authorisation to insurance companies and brokers to offer payment deferrals and refunds to businesses impacted by COVID-19. The package allows existing eligible business customers suffering hardship to:

• defer insurance premium payments for up to six months (for payments due before 30 June 2020)
• request a refund for unused premiums for any policies they need to cancel as a result of the pandemic – without the cost of administration or cancellation fees
• receive a credit or refund for unused travel insurance premiums, without the cost of an administration or cancellation fee

The interim authorisation applies to Suncorp, Allianz, QBE Insurance as well as any other insurers or insurance brokers who choose to take part, as long as they notify the ACCC.

4. Communicate with your stakeholders

It’s important to communicate to all your stakeholders about what is happening with your business during the COVID-19 pandemic.

If you have staff, they need to understand what your plans and the likely impact on them. Be as calm and clear in what you are telling them as possible.

Follow up all your debtors to try and get any overdue payments in. You may need to consider negotiating, based on what they are able to pay in the current circumstances. Also communicate with your creditors to see what payments you may be able to defer. Review your trading terms to ensure that you obtain upfront payments (where possible) or a deposit for any new orders.

Keep your customers updated about your services, for example if your business is affected by restrictions, ensure you communicate as early as possible what this means for them. You should also check the latest Australian Competition and Consumer Commission (ACCC) advice on how to manage cancellations, delays or suspension of products and services in relation to your consumer obligations. If you are encouraging customers to buy gift cards for goods or services to support your business, make sure you are up to date with recent gift card laws.

5. Seek advice on deferring tax payments

The Australian Taxation Office (ATO) can grant you a deferral of certain tax obligations if your business is impacted by COVID-19. Call the ATO on 1800 806 218 or speak to your tax professional to discuss your options. Deferring payments may impact on your eligibility for other stimulus package options, so seek professional advice.

6. See if your business can still operate

As the government has announced expanded restrictions to business activity and travel, check our list of the latest restrictions to see if your business can keep operating or if there are any changes you need to make to fit in with these mandatory requirements.