While the Federal Government’s $17.6 billion stimulus package is welcome news to the business sector, there is still much to be done in the boardrooms and work floors to successfully navigate the challenges of the coronavirus.
The Federal Government’s response to the pandemic includes a range of measures and incentives to help the economy withstand the impact of COVID-19.
Key benefits of package
One of the key benefits to businesses will be the ‘instant asset write-off’ which represents an increase in the write-off threshold from $30,000 to $150,000. This is expanding access to all businesses that have an annual aggregated turnover of less than $500 million.
The write-off will apply to all assets acquired from the time of the announcement (12 March 2020) to 30 June 2020. We would encourage businesses to consider whether any planned post 30 June 2020 asset expenditure could be brought forward to pre-30 June 2020, as a part of tax planning activities.
Other measures announced as part of the stimulus package include financial incentives to support employment of apprentices and capital expenditure.
Our experienced advisory team at William Buck is well placed to provider further assistance in how these measures may benefit your business.
Still a great deal of work to be done
While the Federal Government’s package is important, it doesn’t reduce the responsibility on business owners and operators to provide strong leadership and clear communication.
Maintaining effective internal and external communication channels is vital in times of such uncertainty.
Staff, suppliers, customers and other stakeholders need to be regularly updated on how the business is impacted by this issue and what is being done about it. Providing a level of certainty on what your business can control is so important at a time when there is a danger of misinformation circulating and escalating concern.
Employees in particular will be looking for senior managers to show strong leadership and to outline and steer a robust contingency plan. Confidence in the leadership, teams and systems of a business will play a key role in how well it performs over the coming months.
All SMEs, regardless of industry, are exposed to the business risks and disruptions associated with a pandemic either directly or indirectly.
Certain industries such as travel and tourism have taken the biggest initial hits to the bottomline, however no business is really immune to the direct and indirect effects COVID-19 is having on national and global markets.
From sales and supply chain disruption to staffing, it’s really just the magnitude of the impacts that is unknown. However as with SARS and other substantial shocks, history shows that businesses are remarkably robust and can successfully emerge on the other side. Some businesses may in fact be impacted positively over both the short and long term.
Contingency planning and execution
Pro-active SMEs have already begun initiating their contingency plans.
A key first step is to assess the potential impact of COVID-19 on the operation.
Is your business equipped for staff to operate remotely or what contingencies are in place in the extreme situation of workplaces being shut down for a period?
It’s also a time to review supply chain dependencies and whether the trend of just-in-time supply for manufacturers is still relevant to your business, particularly if you are reliant on Chinese suppliers.
Are there alternative short-term supply options to investigate or if not, how are you explaining disruptions to your customers in order to maintain a long-term relationship?
Interruptions or expected interruptions on sales may require a revision of cashflow projections and a pro-active discussion with the bank if the need arises.
Many SMEs are also cancelling or postponing international business-related travel and are in close consultation with staff about personal overseas travel plans.
Above all, now is a time for calm and knowledgeable leadership with sensible decision-making that keeps key stakeholders informed.