As a public health issue, the outbreak of COVID-19 has led to the implementation of social distancing measures, the restriction of border crossings, and tragically, the loss of life.
But it is also having a significant impact on the Australian economy. We are now navigating our way through the ‘next normal,’ with some businesses reopening and others back in lockdown with the advent of a second wave in some states.
How might the coronavirus affect your company? And what financial assistance is available?
Stock crashes, business closures, and job losses have led to Australia’s economy shrinking for the first time in nine years. We are in a recession.
According to the latest report from the Department of Education, Skills and Employment, the majority of businesses have been impacted. Cash flow and the demand for goods and services has been considerably reduced, 30% of companies have reduced staff numbers, and others have had to let staff go.
Food services, health care, social assistance, and accommodation industries have fared the worst with over 80% of businesses reporting that COVID-19 has affected them ‘a great deal’.
The way businesses have responded to COVID-19 has varied greatly across industries. Some have pivoted their businesses to remain sustainable, and others have moved from rapid assessment to swift responses.
Many organisations are having to test their preparedness in real-time as they evaluate the potential impact it may have. They are also exploring techniques that allow processes, people and information systems to adapt to change, and mitigation strategies have been focused on six key areas.
As businesses plan for the ‘new normal’ after the pandemic, business leaders are considering how to negotiate various critical issues, including:
As we adapt to new ways of working, leaders have also needed to address how COVID-19 is affecting individuals, including:
In terms of how the coronavirus is affecting business, the ripple effects are widespread, particularly for supply chains. Key considerations include:
As businesses prepare for the next wave of the pandemic, CFOs will need to focus on scenario planning and forecasting as well as continuing to manage day-to-day operations. Key issues include:
As organisations build their resilience through the challenges of COVID-19, continuity decisions have led to several tax governance and compliance considerations, including:
As businesses begin to rebuild after COVID-19, strategies that will enable them to recover and keep customers loyal can include:
The Australian Government has released a number of economic stimulus measures for businesses in response to the challenges of COVID-19. This temporary assistance will help organisations withstand the impacts and encourage future economic recovery. They include:
Specific measures include:
JobKeeper will help businesses keep more Australians in jobs. Eligible employees of companies including NFPs will be paid a fortnightly payment for part or all of their wages/ salary. In July, the Government announced an extension of the JobKeeper payment until 28th March 2021. Further changes were announced in August to adjust the reference date for employee eligibility and make it easier for organisations to qualify for the extension.
Temporary cash flow payments of up to $100,000 are available for small to medium-sized businesses, to help pay wages and bills, retain staff, and continue to operate.
Eligible businesses can access a 50% wage subsidy to retain trainees and apprentices, and support the continued development of Australia’s skilled workforce.
Businesses will be offered a safety net to lessen the threat of actions that could force them to close, become insolvent, or go bankrupt. This will ensure they can resume normal operations once the crisis has passed.
For businesses with an aggregated annual turnover of less than $500 million, the instant asset write-off threshold has been increased from $30,000 to $150,000. This can assist with the purchasing of new equipment and is available until 31st December 2020. Accelerated depreciation deductions will also be available for eligible businesses via a 15-month investment incentive initiative.
The Government is guaranteeing 50% of new short-term loan applications to SME lenders, under the Coronavirus SME Guarantee Scheme (available until 30th September 2020). This will further enhance lenders’ ability and willingness to provide credit by providing businesses with funding to meet cash flow needs.
The Scheme will be extended as the economy recovers to support lenders’ ability to provide credit and ensure SMEs benefit through lower interest rates. This phase will commence on 1st October 2020 and be available for loans made until 30th June 2021.
Lenders providing credit to existing small business customers will also be granted an exemption from responsible lending obligations. This will be valid for six months and will apply to any credit for business purposes, including credit limit, credit variations and restructures, and credit limit increases.
$1 billion has been set aside by the Government to support the regions, communities and industries most affected by COVID-19. In addition, the Government is assisting Australia’s airline industry through a package of up to $715 million.
Have you asked senior staff to avoid public transport when coming into the office? Hughes can take care of their commute in the meantime, taking them to and from your office in one of our modern, safe, and comfortable vehicles.
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