On 22 March 2020, the Federal Government announced further economic stimulus measures for individuals, business and the banking sector to support Australia through the unprecedented societal and economic impact of COVID-19 (coronavirus).
Government announced second stimulus package
Support designed to assist businesses to retain employees and maintain operations
Changes to insolvency rules to offer temporary relief
The stimulus package is aimed to cushion the impact of coronavirus and provide a safety net for individuals most at risk, while also seeking to support a base level of economic activity that must be maintained to position Australia to return to ‘normal’ operations on the passing of the contagion. We have summarised the latest measures below.
It is imperative that businesses act decisively in this fast-moving environment. The engine room of the economy – Australia’s middle-market businesses, are nimble, innovative and resilient and subsequently well-positioned to respond to current challenges. However, it will not be without hardship and difficult choices. Strong leadership is critical to navigate the immediate threat, but also longer-term impacts
Businesses impacted in the immediate term should adopt a defensive mindset while seeking to main operational normality where possible. This is critical to cash flow, people retention and the ability to reactivate as conditions improve.
As many businesses navigate the ongoing impacts of coronavirus, it’s critical to focus on the following areas to maintain business continuity:
Personnel: support and protect the health and wellbeing of your employees. Familiarise yourself with the government support available to you to keep people employed. They will be critical to your long-term success.
Customers: communicate with customers. Many businesses will need to adapt. Knowing your customers' needs can assist in adapting efficiently in the most effective ways. This must include consideration and management of credit risk.
Supply chain: communicate with suppliers and monitor the capacity and interdependencies of your supply chains. Plan for the impact of disruption and have contingency such as building up stock levels or identifying substitutes.
Financiers: Most financiers have announced measures to support customers including maintaining existing facilities and even extending facilities. Businesses should familiarise themselves with what’s on offer. Financiers are currently inundated so allow as much time as possible to effect any changes needed. Also consider the new measures proposed in the credit package that are aimed at obtaining working capital loans at favourable rates and conditions from certain approved SME lenders.
Cash flow: in uncertain times cash is king. Forecast your short-term cash flow position for a minimum 12-week rolling period. This will assist with decisions required to keep the business viable. The forecast should consider the newly announced government support to businesses, financier support and the cash flow impact of difficult management decisions.
A view to the future: the recovery of business activity post-coronavirus will be slow. A recession is likely so begin to consider this and plan ahead by accounting for the likely activity level in your market and the need for investment, people and capital.
Contact your Pitcher Partners representative for more information or to understand how the second stimulus package announcement of 22 March 2020 applies to you and your business.