Information is still being released about the Government’s Coronavirus Stimulus package, however, below is what we know so far in a nutshell.
More information will become available over the coming days and weeks. Please feel free to contact us on 1300 978 320 or firstname.lastname@example.org if you have any questions or would like to discuss how the below stimulus affects you or your business individually.
$25,000 to Small and Medium Businesses:
- Businesses with turnover up to $50 million that employ staff between 1 January 2020 to 30 June 2020 may be eligible
- A business that pays income tax on behalf of employees (PAYG Withholding) may be eligible for a payment equal to 50% of the sum of all employees’ total PAYG Withholding, to a maximum of $25,000
- If you are a business that pays wages but not required to pay tax you may be eligible to receive a minimum payment of $2,000
- This stimulus will be issued automatically based on Business or Instalment Activity Statements lodged from April 28
- This payment is tax free
- Payments are expected to be paid within 14 days
- The business must employee less than 20 full-time employees
- Businesses will be offered up to $21,000 ($7,000 per quarter for the first three quarters or 9 months of the 2020 calendar year) for each apprentice
- The payments will be equal to 50% of the apprentice’s wages
- A large business or Group Training Organisation may also be eligible for these benefits if they employ an out-of-trade apprentice who has been in-training with a small business as of 1 March 2020
- Employers can register for the subsidy from 2 April 2020
- Further information available on the governments Australian Apprenticeships website
Instant Asset Write-Off Extension:
- The current tax write-off of $30,000 for businesses with a turnover of up to $50 million is now extended to include businesses with a turnover of up to $500 million and purchases of up to $150,000
- This extension will apply until 30 June 2020
- The government will provide one-off payments of $750 to people on Newstart and to pensioners
- The payment is tax-free and will not be assessable income
Support to particular sectors:
- The Government will be committing $1 billion to support businesses that have severely affected such as the travel and tourism sector
Further to the above stimulus, the ATO will be looking to
be more flexible in the way they will handle taxpayers’ affairs, this is what
we know so far:
- The ATO will allow businesses who usually report GST quarterly to opt in for monthly GST reporting in order to receive GST refunds quicker
- Businesses will be allowed to vary their Pay As You Go (PAYG) instalment to zero for the March 2020 quarter
- Businesses who vary their PAYG instalment to zero will also be able to claim a refund made for the September and December 2019 quarters
- The ATO will look to remit any interest and penalties applied on or after 23 January 2020 and will also be offering low interest payment plans to businesses with a tax debt owing
- All of the above will not be applied automatically and will require a phone call or request put forward to the ATO
8 Ways to Improve Cash Flow
Your business, just like a car, has many moving parts to
keep it running. Every part is important and reliant on other parts to operate
however without cash in the business or petrol in the car they simply won’t get
very far. ‘Cash is King’, we all know this saying and it is definitely true.
Every moving part affects cash flow and below are some tips
on how to ensure all of these parts are running effectively to support a
healthy positive cash flow:
- Make a Profit – This is obvious as no profit means no surplus funds and your cash will inevitably go backwards, however profit does not mean that you will have positive cash flow. I’ve seen highly profitable businesses struggling to survive due to poor cash flow crippling its operation. Refer to 10 ways to maximise profits and reduce corporate stress.
- Ensure Customer Invoices are Paid on Time – Implement an Accounts Receivable policy to ensure you are working with reputable customers who are able to pay and pay on time. Have a process for collecting your invoice payments on time. Refer to How to build a watertight accounts receivable process.
- Align Customer and Supplier Terms – If your suppliers require payment of their invoices within 14 days but your customers aren’t paying you before 30 days then you will always run into trouble if you don’t have a healthy bank balance. Seek to have your supplier terms longer days than your customer invoice terms.
- Improve Inventory Management – Every bit of inventory you have in stock is idle cash. Know your best-selling products and your less popular products and order accordingly. If you have too much of a less popular product on hand, discount the products to get them sold. Cash in your hand is more valuable.
- Forecast when Quoting and Tendering Projects – When you are quoting or tendering for a project try to have your milestone payments as evenly spread as possible. If doable also try and work into the quote or tender a deposit requirement to get started or a payment due on signing the contract. From the day a project starts, if your business works on 30 day terms with its customers and you invoice at the end of the month this could mean that it will be almost two months before your first payment is received after the project has started. In that two months you will need to pay employees and contractors working on the project and also any material required before the first payment is received leaving a large hole in the bank balance.
- Lease or Finance Assets, Don’t Buy – Most of the time the assets you buy are depreciating in value over time. Don’t tie your cash up in something that is losing value. Keep your cash in the bank and use finance to purchase an asset.
- Forecast Growth – When a business is going through a large growth phase and it ramps up really fast, it is really exciting but most of the time the cash flow will suffer. There needs to be some large inventory purchases or hiring of more staff or some big asset purchases to support the growth however the revenue and profits from this growth may not be seen for a couple of months if you are working on 30 day terms with your customers.
- Do Budgeting, Revenue Projections and Cash Flow Modelling – Do a budget for the year including a revenue projection to know what lies ahead. What are your good months and what are your bad months? Put all of this information into a Cash Flow model which takes into account all of your income, expenses, liability payments and bank balances including the timing of these payments to see when cash will be tight. This will allow you to plan for the rainy day and assist in making various purchasing and business decisions.
If you require assistance please contact us on 1300 978 320 or email@example.com.
This is a great benefit for businesses and you have until 30 June 2018 to make the most of it. Please contact us to find out how it can help your business.