One of the biggest problems facing Australian businesses during the COVID-19 pandemic is cash flow.
Early statistics from the Australian Bureau of Statistics found that only 11% of businesses reported an increase in demand for their products, with 4% recording an increase in turnover. Cash flow continues to dampen the economy with flow-on effects.
The Australian Government has introduced several measures designed specifically to support the flow of credit to businesses. Stimulating cash flow will hopefully help companies stay in business and ride out what may perhaps be a long economic recovery.
As small and medium-sized businesses begin to lodge their March Business Activity Statements, business should soon see the Government’s cash flow boosts arrive.
A trading business lodging monthly wage figures to the Tax Office will be paid three times the March Pay-As-You-Go Tax Withheld as a cash flow boost. This amount is capped at $50,000.
The cash flow boost payment is tax-free. So, the value of the payment to small- and medium-sized businesses is higher than it might otherwise seem.
To access the cash flow boost, you must lodge your activity statement for PAYGW.
More information regarding the Government’s cash flow boosts can be found here.
Below are some helpful tips to support your businesses cash flow.
Start with your cash flow forecast - Develop a cash flow forecast model. A cash flow forecast model provides your business with significant insight into the unbiased flow of cash, how the cash is allocated and where it is coming from. This will give you a clearer understanding of the causes of your business’ financial health (whether positive or negative).
Maintain a consistent cash flow - Once your business has completed a cash flow analysis it will be necessary to focus your attention on the areas where your business is leaking cash – whether this is following up on late invoice payments, keeping a check on expenses or ensuring you have savings or a line of credit to fill the gaps between income and revenue.
Take advantage of Government Stimulus packages – One of the first strategies introduced by the government was aimed at supporting businesses by boosting cash flow. Securing business finance, especially unsecured loans, is hard for small to medium businesses. The government has provided a guarantee of 50 per cent to SME lenders to support new short-term unsecured loans to SMEs. This will assist SME’s in gaining timely access to credit, which will help support them throughout the coronavirus pandemic.
For a lot of businesses it can be overwhelming and difficult to navigate your way through all the information, and many may not be aware of all the assistance available to them. We have gathered all the vital information you need to understand what you and your business may be entitled, follow the link below to access the full guide.