Many businesses have experienced significant challenges during COVID-19 and many business owners have been personally and financially impacted as a result.
There’s no doubt about it, the past few months have been tough. We want you to know we’re here to help with proactive strategies for both you and your business. Read responses to the FIVE most common questions we have been asked for adapting financially to COVID-19.
Over the past few months, our focus has been on assisting our clients through uncertain times, and now as we look ahead and plan for a better future, we’d like to share these insights with you:
Q: What are the warning signs for a cashflow crisis?
A: Cashflow is by far the biggest concern for our business clients during COVID-19. As the JobKeeper transitions to a new form and other stimulus measures come to completion from the end of September, it’s more important than ever for business owners to consider their cashflow. Warning signs for businesses needing to seek immediate advice include not being able to pay creditors, receiving demands from creditors or not having reliable cash flow in place.
In these circumstances, proper cashflow forecasting is critical and as a general rule, businesses need professional assistance establishing cashflow forecasts. We’ve been helping our clients to understand what is necessary expenditure, and what isn’t. We’ve also assisted with negotiations with suppliers and/or landlords and helped businesses plan more effectively in the longer term. To do this we’ve used business financials to model real-life business scenarios. Models are helpful in understanding what the financials are telling you about your business, and they’ll identify actions that can improve business performance.
Q: What about my personal finances?
A: Many business owners focus solely on building a solid business and have shown less discipline when it comes to building and protecting their own finances and personal wealth. We believe business and personal prosperity should go hand-in-hand and we’ve been working with our business owners to create greater certainty and comfort when planning their own prosperity. Our advice has included mapping out well-planned business succession strategies, establishing structures for tax efficiencies, asset protection, building wealth through investments and asset accumulation, managing risk and making the most of super. And of course, in addition to developing personal wealth accumulation strategies, we’ve been implementing financial contingency plans for changing circumstances.
Q: Am I making the most of the personal stimulus funding on offer?
A: While many of our clients are currently experiencing a period in which their personal expenses have continued while their income has reduced, we’ve encouraged them to weigh up their options in consideration of their longer-term personal financial goals. For example, refinancing a mortgage may be a more appropriate strategy than taking a ‘mortgage holiday’. For those asking about accessing super early or reducing pension drawdowns, our advice has included careful consideration of unwanted tax implications and how reducing a super balance now could erode the benefits of compounding interest later. We’ve certainly favoured risk protection mechanisms and other strategies for establishing financial security that are appropriate to stage of life and goals, rather than just reacting to the likely short-term impacts of COVID-19.
Q: What are my options for minimising tax?
A: There is a big difference between tax planning and tax return preparation. Effective tax planning is about looking forwards so you have enough time ahead of June 30 to take actions that can make a difference to the amount of tax you need to pay. Now that we are at the beginning of a new financial year, it’s important to consider longer-term strategies that will enable business owners to align their tax management with their business needs and personal financial goals. These discussions have included bringing forward and deferring tax-deductible expenses to make the most of business and personal cashflow, debt management, using or establishing structures as well as your long-term objectives including wealth accumulation and retirement goals. And of course, we’ve been making the most of the Government Stimulus offers that include instant asset write off and accelerated depreciation of investments.
Q: What can I do now to better prepare my business during other times of uncertainty?
A: Many business owners have felt underprepared for adapting to COVID-19. This has highlighted the need for taking action to enable them to feel confident and their business to remain relevant in the future. These business owners recognised that professional advice was a necessity for accessing information for making business decisions in unfamiliar territory that could affect their personal financial affairs and long-term prosperity.
Our response has been to encourage our clients to be proactive, to take a conscious and structured approach to not just managing their business and personal affairs, but to strive to continually improve them. We do this for our clients through two key programs – our 100 Day Business Challenge for new clients and our M.U.S.T. Do for Business framework, which is a comprehensive, tried-and-tested business development and support service.
These Q&As are a sample of just some of many issues that concern our clients. We understand that you may have questions of your own that may be unique to your circumstances. We encourage you to give us a call on 03 9708 8801 or email info@rvpartners.com.au and get the advice you need.
At Robinson Voss Partners, we have over 40 years combined experience and expertise in specialised tax issues, accounting, business advice and approaches for building personal prosperity. We are single-minded in our goal to help clients achieve their business and personal financial goals.
General Advice Disclaimer: The information contained within this document is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Robinson Voss Partners (RV Partners) strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances.
