Managing cash flow during COVID-19

With the Covid-19 outbreak impacting the global economy and the ability of businesses to carry out their usual operations, maintaining control on your cash flow becomes crucial to the survival of your business. Below are some tips to help stay on top of your company’s cash flow and improve your positive cash flow:

  1. Prepare a cash flow forecast

We recommend you prepare a 3 month cash flow. Trying to forecast longer than 3 months may be too difficult. This will help you make informed financial decisions so you can hopefully avoid cash flow shortages.

  1. Improving your cash inflow

Improving positive cash flow by increasing your income or decreasing your expenses will help the chances of avoiding cash flow shortages. Increasing income during the COVID19 pandemic will be challenging but if you have old stock which can be discounted, that might be a good way to help boost cash flow in the short-term. Some other measures might be to offer a discount on some of your debtors, to encourage them to pay quickly.

  1. Reducing unnecessary expenditure (cash outflow)

The next best way to improve cash flow, would be carefully review your business cost base to see if you reduce any expenses, especially non-essential expenses. If you critically analyze your cost base, you might be able to save more money than you first thought.

Maybe you can reduce your workforce or cut back the working hours of your employees. You should also apply for the jobkeeper assistance from the Australian government.

  1. Put your business into hibernation

Some businesses have been forced into hibernation during the COVID19 pandemic. If you are unable to operate during the COVID19 pandemic then putting your business into hibernation might be best to preserve your business.

We understand that everyone is going through a tough time and are committed to helping businesses overcome challenges concerning cash flow and insolvency. We are registered company liquidators who offer a FREE 24/7 insolvency hotline for Australian directors seeking free, confidential advice. Please call us on 1800 731 155 now.

Safe Harbour as temporary relief during COVID-19 (Coronavirus)

With COVID-19 causing major disruptions to businesses and impacting the economy as a whole, businesses are faced with many unforeseen challenges. At times of financial distress you may be finding it tough navigating through difficult financial situations.

You may be worried about your duties as a director or business owner. According to the Corporations Act 2001 directors have the duty to prevent the company from incurring further debts once the company is insolvent, and if you fail to do so you will be become personally liable for the debts incurred.

Some good news is that Australia’s ‘Safe Harbour’ laws are designed to protect directors that attempt to do the right thing and lawfully turn around their company, even if the plan fails and the company later go into liquidation. If you would like more information on ‘Safe Harbor’ laws please click here.

On 25th March 2020 the Coronavirus Economic Response Package Omnibus Bill 2020 came into effect, granting temporary relief for financially distressed businesses. This included providing an additional ‘Safe Harbour’ for businesses for the next six months. This means that you will not be liable for any insolvent trading from the period 25 March 2020 to 25 September 2020.

If you would like to learn more about the ‘Safe Harbour’ provisions and changes to legislation that may impact your business please contact us. We understand that everyone is going through tough times and we are committed to helping businesses overcome challenges concerning insolvency and financial instability. We are registered company liquidators who offer a FREE 24/7 insolvency hotline for Australian directors seeking free, confidential advice. Please call us on 1800 731 155 now.