80 days till the end of JobKeeper
As the clock ticks towards the planned end of the Government subsidy, those businesses receiving JobKeeper need to start planning how they’ll stand on their own two feet.
By Jim Vass
When it was introduced earlier this year as part of the Federal Government’s economic stimulus response to the Covid-19 pandemic, JobKeeper was hailed as a lifeline.
And make no mistake, for the nearly 900,000 businesses who have been able to access the payment for staff, it has been just that. Furthermore, JobKeeper has protected more than 3 million jobs, and given recipients some money to keep the economy ‘ticking over’ while lockdowns were in place and to help them avoid ending up in personal financial duress.
JobKeeper is due to end in September
Despite lobbying from wide and far to extend the programme, from the hard hit tourism sector for example, along with calls from accounting industry groups such as the CPA, to taper off the payments rather than sever them, the subsidy is due to meet its legislated end on September 27 2020.
All businesses should be planning for exactly that.
While there has been some speculation that the Prime Minister Scott Morrison and Treasurer Josh Frydenberg are considering varying the JobKeeper programme for continually struggling businesses, nothing as yet, has been set in stone. And to wait for any concrete answers in this regard, is to foolishly waste the valuable time between now and the next official announcement scheduled for the end of July.
The reality check
Those businesses who have been reliant on JobKeeper, need to start planning NOW, exactly how they will manage when the payments stop.
And to do that, businesses really should seek professional help from tax advisors and accountants to ensure they accurately forecast, and prepare ahead for the likely impact on cash flow and reserves towards the end of the year.
Don't forget December
This is not just a good idea, it really is critical, because only a few short months after the end of JobKeeper, businesses will also likely face what’s traditionally known as the ‘Christmas Cash Flow Crunch’ over December and January.
This year many businesses will not have had enough trading to build reserves to manage this adequately.
The harsh reality is that those businesses which survive Covid-19, but come out fragile, could face a death knell caused by the holidays. There are ways to successfully prepare for, and manage, the months ahead, with prudent financial planning, with strategies such as accurate forecasting, risk mitigation, cutting costs, selling off burdensome inventory, seeking a small business loan, or negotiating tax payments, to name a few.
Future-proof your business
But these are short-term solutions. To future-proof your business, you need to be thinking outside the norm and considering where the opportunities really lie. Have you considered diversification? Digitisation? Disruption? What does your business’ future look like?
If this sounds bleak, it’s not meant to. It’s just a call for businesses who want to survive, to get the help they need. The very good news is that recent forecasts suggest that the recession is likely to be less severe than originally expected.
That doesn’t mean that businesses should rest on their laurels or put their heads in the sand. Navigating the next six months is going to be tough. So be sure to get professional advice.
If we can help, contact us.
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