1300 854 480 [email protected]

Why you should consider a Business Health Check Now that JobKeeper has Ended

 

The JobKeeper programme came to an end on March 29th. With a total cost of $101 billion over the course of the year, JobKeeper was the largest direct stimulus offered by the federal government to Australia during the coronavirus pandemic.

That is why it is more important than ever to conduct a business health check!

 

Changes to the Statutory Demand system were adopted in tandem, reducing the statutory demand’s effectiveness as a debt recovery weapon, secured lenders such as banks provided moratoriums on credit facilities, and the Tax Office curtailed its debt collection efforts.

 

As a result, many firms avoided formal insolvency, with overall insolvencies for the last 12 months being around 3,000 firms lower than the historical average, according to Australian Securities and Investments Commission statistics.

 

As these diverse regimes come to an end, many businesses and their directors should conduct a health assessment of the company to determine its current state.

 

How to undertake a Business Health Check

 

  1. Create a cash flow forecast/budget to determine the business’s cash flow requirements and anticipated cash burn for the following twelve months;
  2. Examine all business expenses to see if there are any areas where costs can be cut and profits can be enhanced.
  3. Examine the company’s creditor status to confirm that all creditor accounts are up to date and in compliance with trade agreements. Within the cash flow forecast, an evaluation should be made to guarantee that these outstanding creditors can be met from ongoing business operations.
  4. Examine all finance facilities within the business to ensure that they are fit for purpose and that funding is available to meet any expected cash burn;
  5. Consider the risks associated with the ongoing business, such as the risks of snap lockdowns like those in Victoria and Queensland, additional border closures, or a general economic downturn.

If you need a more detailed explanation of how to conduct this assessment, we highly suggest checking out this article. 

 

If your business is in trouble, what can you do?

What exactly is it? If the business health check reveals worries about the company’s ability to repay creditors, finance facilities, or meet any continuous cash burn, what should you do?

Then, as soon as possible, take efforts to understand your business options and reduce your personal liability from dealing while bankrupt. 

 

These are some of the possibilities:

 

-Restructure/workout in an informal setting

-Ordered business wind down 

-Voluntary Administration or Small Business Restructuring Plan 

-Members Voluntary Liquidation or Creditors Voluntary Liquidation

 

General Advice Warning

 

The information on this page and on this website has been created solely for general informational purposes and is not intended to constitute specific advice to any individual.

Any advice given on this page or on this website is general in nature and does not take into account any individual’s specific investing objectives, financial position, or needs.

 

Before making an investment choice based on this advice, you should consider whether it is suited to your specific investing goals, objectives, and financial circumstances, with or without the assistance of a securities adviser.

The examples on this page and on this website are offered solely for educational purposes.

 

Every attempt has been made to ensure that the information on this page and website is accurate. [email protected] Pty Ltd, its officers, representatives, employees, and agents disclaim all liability for any loss or damage caused by any person directly or indirectly relying on this material, including any errors, inaccuracies, or omissions from the information provided on this website.

If you found this blog post helpful and informative then you definitely need to checkout some of our previous blog posts, including the Bank Account Theory vs Financial statement theory and The importance of having a business plan.