Proactive Accountants Will Help You Prepare for the New Year!
Proactive Accountants will help prepare you for the new year! What you should do in January to set yourself up for 2021.
The damage Covid-19 has wreaked upon businesses looks set to be colossal, with many companies struggling to stay afloat or have the unenviable task of surviving post the end of Job Keeper. If your Job Keeper payments are coming to a close and you are unsure of your financial position going forward, now is the time to speak with your advisor to make some strong financial decisions. Do not wait till March to make contact, let’s plan together to get you through this period.
1. What if scenarios
Work closely with your advisor to project your cash flow across a number of different scenarios – worst case, most likely and best case.
Businesses should avoid the temptation to optimistically prepare for “best case scenarios” only and instead be realistic about future revenue.
“What will your cash flow look like if your sales dip 20 percent? What about if it is 40 per cent? What about if it is 60 per cent or more?
Businesses are going to need to face this challenge head on and for many it is not going to be pretty.”
2. A People and Finance Check
Take stock of your current financial position against your workforce situation. You should assess the needs of your business – in the short term and in the long term – against the people structure should you need to make some quick decisions. Take into account, holiday leave entitlements, tenure of the employee and all associated costs should you need to act.
It is beneficial to your peace of mind to know the numbers prior to having to make any decision
3. Cutting costs
The review you’ve just undertaken will show whether you have a viable business in the long term, and whether you need to cut costs now in order to survive the end of JobKeeper.
“This may well be through reduction of your people, expenses, office rent, vehicles within the business, and other items”.
Now is the time to make some tough decisions. To support your staff and to free yourself from legal issues down the track, transparent communication is key.
4. Communicate early with employees
If you’ve made the tough decision to reduce headcount, you need to build a business case to defend your actions in legal proceedings if required.
“Fair Work has seen a 70 per cent spike in claims for unfair dismissal in the last quarter alone.”
Businesses planning a redundancy should:
· Plan the redundancy process and timetable
· Prepare managers or yourself for the conversation
· Prepare documentation
· Calculate redundancy packages
· Consult with the employee throughout the process.
At Kensington Partners we are thinking well ahead of the game. It is important that you speak with your advisor well before trouble strikes so you can be clear and calm in the decisions you need to take.