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Cashflow

Running a business is a challenge at the best of times, but throw in a pandemic and the associated economic woes – and cost cutting has never been more important. So, in what areas could your business improve on when it comes to keeping that expenditure down? Let’s talk…

Vu Tran, Co-Founder, Go1

There are many ways SMBs can cut costs, but given the pandemic, it’s even more important than ever to balance any action with staff wellbeing. 

Conduct an audit of your biggest cost centres. It’s important to have a clear view of all expenses to help guide which costs can be slashed. For example, could a virtual assistant replace the administrative tasks of a few people so they can provide higher value contributions that can have a greater impact on revenue?

Staff training is another secret weapon – with minimal investment, it can do wonders for the productivity and morale.

With remote working and hybrid working set to continue, reducing office space may also be desirable. For some businesses, switching from traditionally leased space to an on-demand co-working space (or desks) could offer further cost savings.

Stephen Barnes, Principal, Byronvale Advisors

In a time of crisis in a business, like most businesses are facing now with COVID-19, it is vital that decisions are made. 

With cost cutting, go fast and go hard. 

If you suspect that sales are going to decline, and debtor days are going to lengthen, cut back your overheads now.  Waiting until the sales slow and the cash cycle lengthens, or waiting to see what happens in a week, a month or a year, is to me like watching a car crash in slow motion. 

Cut back your overheads now and cut them back hard. Then, when circumstances improve, grow these expenses slowly. You might even find you come out of the crisis a lot stronger and leaner business.

Dunya Lindsey, COO, Wiise

Amid the pressures of COVID, many businesses have had to take a good hard look at their expenses to determine where cost-savings can be made. In a time where survival is key, cash flow becomes absolutely critical – running lean is a priority right now.

Automation is one way to save costs. Labour-intensive, manual processes such as re-keying information are a direct hit to a company’s productivity and ultimately cash flow. Automation enables staff to spend more time on higher value tasks such as maximising sales, keeping customer satisfaction high, or getting orders out in time.

Understanding the true cost of sale is also key. For manufacturing and logistics businesses, freight costs have rocketed, likewise the price of imported goods. The cost of sale has to be recalibrated. To do this manually is very complex, but cloud-based ERP systems can automatically recalibrate costs due to changing shipping fees and taxes to ensure a profit is always being made.

Ollie Watts, Co-Founder, Hey Bud Skincare

Applying cost-cutting methods can bring immediate savings and improvements to the profitability of your business. As a growing E-Commerce store, Hey Bud Skincare constantly requests updated contracts from its courier and handling companies as well as its payment processors. Talk to these companies and they will provide baseline figures to achieve these cost savings.

As a start-up, invest your time in learning new skills (such as media buying, website development or video editing), if it helps you grow your business without risking your long-term goals. You’ll save on outsourcing fees and learn a useful skill set at the same time. 

It’s also who you know that brings success in cost-cutting. Reach out to people who have more experience in the same field and industry than you – they can save you time and money by sharing with you their costly mistakes which you can avoid, and also provide tips that can optimise and grow your business. 

Jarrod Kinchington, Managing Director, Infor ANZ

As companies embark on digital transformation journeys, there are significant savings to be made by adopting infrastructure – and software as-a-service solutions, and replacing the “traditional” hardware and software approach. Choosing the right cloud partner not only saves money, but provides the ability to rapidly scale your business accordingly and remain resilient in today’s business environment.  

Intelligent solutions that include automation, machine learning, asset management and workforce scheduling can reduce hours of mundane tasks and administration, giving employers the opportunity to re-purpose their staff to focus on higher-value work.  

Modern and industry-specific software, purpose-built for different micro-verticals, can help simplify business processes and foster closer collaboration amongst employees – especially in the new remote and hybrid working world.

More advanced organisations are expected to accelerate their adoption of artificial intelligence and business analytics that will enable them to accurately forecast supply and demand in real-time.

It’s also important to audit the services you currently have and discontinue those you no longer use (but are still paying for) as well as duplicate services you may have subscribed to.

Ryan Miller, CEO, Keeping Company

If you start any cost cutting exercise by first targeting the line items in the budget which cost the most, you’ve missed a critical step – aligning cost cutting with the business strategy.

Start with the business’ overarching strategy. What will achieve a return on investment against your strategy and what won’t? Going paperless, renegotiating supplier contracts and cutting discretionary costs like entertainment or gifts will deliver savings without impacting your business goals. However, making overly deep cuts to headcount, for example, could lead to the business becoming too under-resourced to achieve your strategic goals.

Other options for cutting costs include outsourcing or automating tasks, transitioning to a partly or fully virtual office, changing banks to a more cost effective facility, consolidating any credit cards or establishing a system to automate payments or provide reminders to make payments so you can avoid unnecessary late fees.

Joseph Robins, Payments Expert, GoCardless.

According to the Forrester report, 85 percent of businesses have more than 20 people responsible for managing payments, and more than 60 per cent of surveyed payment decision-makers said the most time-consuming areas are matching payments to invoices, and reconciling reporting from different gateways or processors.

This more than often means that businesses of all sizes need dedicated staff to manage the different stages of the payment process, be it manually entering payment details into a legacy system, generating payment files to be submitted to a bank, manually reconciling each day or chasing late payers.

There’s a big misconception in the difference between price and cost when it comes to a payment solution. Your “cheap” provider may charge you cents in transaction fees, but could be costing you thousands of dollars in human intervention. Now imagine those staff are freed up to work on “value-add” initiatives like expansion or increasing sales, and it quickly becomes evident that spending that bit more for a fully automated solution can have a huge impact on your business as a whole.


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The Australian Government’s JobKeeper scheme has been of great support to businesses nationwide during the pandemic. With JobKeeper payments now reduced and the end of the scheme looming, Let’s Talk about what it can mean for businesses…

Rob Smith, Partner, McGrathNicol

JobKeeper has been the most significant and successful COVID-19 business support measure, providing substantial cash and employment support to impacted businesses across Australia through 2020. JobKeeper payments reduced again on 4 January 2021 to no more than $1,000 per fortnight and the scheme is currently set to expire on 28 March 2021. 

Without significant new government financial support, many businesses that continue to be adversely impacted by COVID-19, particularly in the tourism, travel, wholesale and retail industries will come under renewed liquidity and employment pressure from April this year.

We anticipate that asset-light small to medium sized businesses, with less funding options available, will be most affected. Solutions may be to permanently reduce employment, seek further concessions from suppliers, landlords and lenders, or to take more drastic measures such as closure or insolvency. Such actions will have a knock-on effect, impacting employment, liquidity and working capital through industry value chains and the broader economy.

Tracey Dunn, Associate Director, RSM Australia

While some businesses were hit hard by COVID-19 lockdowns, many have already transitioned away from JobKeeper in the second round. Most other businesses will have been planning in advance for the end of JobKeeper.

Businesses that are experiencing cashflow issues at this point may need to look at the business more broadly. It’s possible that underlying business issues were compounded by the COVID-19 crisis, magnifying and accelerating the impact of these issues for those businesses. If small businesses are likely to struggle to meet their overheads without JobKeeper, they should speak with their advisor to identify options. Restructuring could help the business emerge from this crisis stronger than before. In some cases, unfortunately, it may be that the business needs to be wound up.

Small businesses owners who are concerned about the end of JobKeeper should speak with their business advisor or insolvency advisor as soon as possible to maximise their chance of success.

Tom Cornell, Head of Assessments APAC, HireVue

Following the Government’s comments, JobKeeper will not be extended beyond its current deadline and instead Australian businesses will lose their safety net during March. For many businesses this will require a reassessment of their talent needs in order to ensure that all current and future hires can be adequately supported.

This may lead to HR teams having to make difficult decisions. However, the core thing to bear in mind is the long-term health of the overall business. The current optimism around economic recovery is based on a range of factors, including the effectiveness of COVID-19 vaccines. Hiring talent into an unstable and potentially short-term environment comes with its own set of challenges and HR teams would be wise to take a cautious approach in the coming months. 

On the flip side, companies fortunate enough to be in a position to hire, will have an expanded pool of talent to draw from, so will need to effectively assess potential candidates to ensure they are securing the right fit for the business. Either way, this is not a time to be making knee-jerk decisions, but instead to be acting strategically.

Gordana Redzovski, Vice President APAC, Vend

Few industries were harder hit by the pandemic than retail, so for many who relied on it the impending end of the government’s JobKeeper program represents a daunting cliff edge. Despite that, though, the local retail industry has, and continues to make strong strides, with the proliferation of ecommerce, the “shop local” sentiment and easing social distancing restrictions representing a platform that could alleviate some of  the concerns about its conclusion.

That’s not to say it’ll be easy, though, so ensure you have a solid understanding of your business’ current financial position. Look at the past 12 months as a whole and then identify where you might be able to cut costs or implement more cost- and time-effective processes. If, for instance, you’re wasting time on manual admin tasks, consider how you might be able to adopt digital systems and processes to save both time and money in the long-run. Consider, also, whether flash sales, loyalty programs or discounts for recommending friends could incentivise a short-term spike in custom.

Jonathon Colbran, Partner, RSM Australia

Government stimulus funding has kept Australian small businesses afloat during the COVID-19 disruption. JobKeeper was a highly effective cashflow measure but, although it was extended a number of times, it was always intended to be finite. Businesses should therefore be prepared for it to end.

Unfortunately, it’s not clear that business owners have proactively planned for this. In an environment where many significant creditors have deferred debt repayments, businesses need to prepare for the time when these debt repayments will re-commence or return to pre-COVID-19 levels, since most debts were only deferred, not forgiven. When the government stimulus payments eventually stop, this is likely to affect cashflow.

Businesses continue to face risk from COVID-19 and other, unforeseen disruptions. It’s essential to work with a business advisor to plan for uncertainty, find ways to protect cashflow and explore all options such as restructuring to protect and improve the business.

Dunya Lindsey, COO, Wiise

The end of JobKeeper should be a sign that everything is getting back to normal. But as any business knows, “normality” is still a long way off. Australia has so far weathered the impact of COVID-19 better than many other nations. But certain industries have been particularly hard hit by continued travel restrictions. Travel and tourism, international education, freight and logistics will still be severely impacted even as JobKeeper ends.

This is a crucial time for businesses to take advantage of the right technology solutions. Having robust accounting and ERP software is critical to generating the data and insights needed for smart decision-making. This will boost business agility and help them keep a close eye on cashflow, as well as ensuring there is enough capital to rebuild businesses and meet deferred payments. Employment forecasts seem more positive, with labour force figures showing continued improvement since the depths of recession in June 2020. But the recovery is not evenly spread. For vulnerable businesses, still struggling and exposed to uncertainty, ongoing support measures will be critical.

Simon Le Grande, Director Of Marketing And Product Management, ‎Lightspeed

With the hospitality industry still facing so much uncertainty, there is hope that the federal government may continue to support the industry by extending JobKeeper or replacing it with a hospitality-specific scheme such as ‘HospoKeeper’, currently being pitched to the treasurer by Restaurant & Catering Australia.

However, if tough staffing decisions do need to be made by business owners, making the right decisions will be paramount. It will be critical to understand how business has changed over the past six months, including: What are now the busiest hours of the day, and days of the week? What is the new order channel split (eg: dine-in vs. takeaway), and how does this vary by hour? Getting the mix of skills and coverage right when rostering will be more important than ever.

Hospitality owners should also consider implementing emerging technology to generate additional staffing efficiencies. Connected, cloud-based POS systems enable access to tools that can bring efficiencies to roster management such as digital ‘order at table’ solutions, and rich, real-time analytics features that empower smarter business decisions


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While 2020 packed a punch that not many people were expecting, impending vaccines and a rebounding economy offer a glimmer of optimism for business in 2021. However improved economic conditions also mean a reduction in government safety nets like JobKeeper and cash flow boost. Properly managing cash flow in 2021 will be a precarious and tricky task for many businesses.

We chat to Dylan Burgess, Partner Relationship Manager APAC at Float, about the hidden cash flow risks in 2021. 

What are some of the biggest issues businesses have with managing cash flow? 

The hardest thing is that businesses aren’t always planning for the necessary expenses coming up. Key things that get missed are superannuation, GST payments and tax withholding. They’re personally liable for these things and they’re not planning for it. It’s once a quarter and it’s not always on their radar.

In COVID-19, this mindset has done a 180 degree pivot because lockdowns are on the back of everyone’s mind. In Melbourne, one accountant had 140 partners close because of lockdowns which has had a massive impact on cash flow. While there isn’t a vaccine, lockdowns are always weighing on the mind of business owners. The mindset of planning for shutdown periods and how long a business can run for if there is a lockdown has kicked in.

Businesses have gone from forgetting statutory expenses to planning cash flow ahead of time.

In lockdown, there’s also been a lot of businesses who’ve had to pivot. But if you’re pivoting, you are asking: can we afford to do it? If we don’t pivot, will we survive?

What distinguishes the companies who successfully pivot from those who don’t?

It comes down to planning. 

Dylan Burgess, Partner Relationship Manager APAC at Float

Those who have done it successfully have foreseen what it will cost them. Acting first and asking questions later isn’t a viable approach in COVID-19. You need to be really calculated and really thinking and pre-planning everything. 

If there’s a curveball and the numbers don’t necessarily stack up, there’s no second chance. We know that loans are available but the banks are hurting now because of loan deferrals and so credit is hard to obtain. Commercial agreements are coming to an end. All of the safety nets are starting to draw to a close. When they’re no longer available, if you didn’t pivot right it’s hard to get out.

The most successful businesses are the ones who did the homework first and planned ahead to see if they have enough cash, know when they’ll start going into the green and ask whether that’s viable. 

What do the low number of bankruptcies in 2020 signal for 2021?

We did an estimate that predicts there will be 3,452 zombie businesses by December this year. Zombie businesses are businesses that otherwise would have declared bankruptcy but are not doing so because of government measures that are in place. 

The lower numbers of bankruptcies is a scary figure. In 2021 there’s going to be an increase in administration. That’s something that we’re worried about and we help businesses with.  We want them to be planning and forecasting and run commercially viable businesses.

What should businesses be doing to prepare?

There’s a couple elements. The first is to be smart with reopening. There’s a lot of excitement and energy as borders start to open. The economy is opening, there’s the trans tasman bubble and we’re seeing a lot of confidence being built up.

But the risk is overconfidence. 

Be careful with stepping on the gas pedal. We want businesses to be successful but we want them to do it in a way that is smart and makes sense. Right now what you thought your reopening would look like and what reopening in a post-COVID-19 world actually looks like is different. 

If you’re in the hospitality or creative industries, you’re going to have less income because you’ll have to comply with social distancing and you’ll have fewer customers at any time. Your income will be lower but you’ll also have higher cleaning costs. So you’ve got to do your homework and understand what is financially viable before jumping on the optimism bandwagon. 

What Government measures should businesses be cautious of and what should they be capitalising on?

The government measures to be wary of are hiring incentives. You don’t want to be hiring someone because you’re getting a good deal from the Government, you want to do it because it makes sense. A lot of businesses think they can get more from the Government, but if you are not growing it is not a good time to hire. 

A lot of businesses are also propped up by cash flow boost and JobKeeper. Redoing your numbers and planning 2021 without cash flow boost is important because JobKeeper is coming to an end. 

There are a couple things that businesses should be capitalising on from the Government. There are grants for investing in technology and training. There are also insolvency initiatives around helping businesses before they end up insolvent. If you are in that borderline and it looks like your business won’t be viable, look into that insolvency reform – see what you can do in terms of restructuring and talk to specialists. 

What software should businesses be using right now?

Businesses should be automating compliance. They should have Hubdoc to automate bill capture and receipt capture. That feeds into Xero or Quickbooks to leverage the power of cloud accounting. 

Once you’ve got those in place, look into some sort of reporting solution and invoice management solution. If you’ve got complex cash flow or are looking to grow, have Float in place to take data from Xero and turn that into actionable forecasting solutions to see what your cash looks like.

What should businesses be doing to prepare for 2021?

Don’t get sucked into all the hype and optimism. Expenses will be higher and income will be lower than expected. If you’re banking of 2021 being normal, it may not be the case. 

Vaccines are coming out but they won’t be in place for Q1. Lockdowns are a real thing that may happen if anything goes awry – so err on the side of caution. Do your planning and do your homework, look at what you expect to come in and what you expect to come out. 

It’s easy to jump on that positivity bandwagon when we’ve gone through such a hard year. But if you do that without first doing your homework, you end up in a yucky creek without a paddle.


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