We are certainly experiencing interesting times in business today.
I have had discussions with many of my clients and some of you around the effect of our lockdown in the last week. Some clients have had no effect and kept trading others are either partly operating or closed.
For those of us affected, how we manage our cashflow has been a major discussion. The government has offered stimulus packages of either a cash stimulus towards our tax payments or Jobkeeper for employees.
Whilst this is a great help, we need to be mindful that we use these funds carefully. Yes, jobkeeper is to pay employees, however be mindful that when trade starts to flow again that any excess funds you think you have are invested carefully. The cash stimulus is the same. It is best to continue putting aside GST and PAYG as though you are not receiving these funds to ensure your cashflow is managed carefully.
Why you ask? Well it is easy to start seeing the cash in the bank as a good thing and then think what do I need to pay or invest in? What have I been putting off purchasing or buying that I can now spend my money on.
Injecting these funds into cashflow and not planning them carefully can be a danger. I have heard a few people say this is great I can now do A, B or C with the extra money.
I understand times are tough and whatever help we can get financially is a gift, please remember to speak with your accountant to ensure you are planning for the day the stimulus stops.
We need to get back to business as usual as soon as we can and if these funds are flowing in and we are not careful there could be a rather large cash gap in 6 months when this all stops.
So, plan as much as you can. Be frugal, manage your cashflow carefully and if there is money available at the end of this – then invest it.