As the country moves to Level 2, experts from leading accounting and business advisory firm BDO say that business recovery will depend on three key factors.
The first is leadership and strategy. This comes into play regarding planning for the future. Rather than trying to push back toward normality, it’s important for business leaders to understand that there is no going back, and the challenge is instead to find ‘new normal’. This could mean taking a step back from the business model and reassessing it, in order to plan for a range of possible circumstances the business might need to navigate through. The first step to achieving this is by re-establishing core priorities for the business, and ensuring that values and behaviours are in place to support work going forward.
It’s also important to remain positive and realistic. Of course, with any time of turbulence, better days will come eventually. Making sure you are able to bring your staff and clients with you is the key point.
The second major factor is cashflow. Once planning is out of the way, it’s important to re-analyse your projected cashflow. Making sure your cashflow figures are accurate will give you solid data to lean on when making decisions. BDO has recommended that NZ businesses forecast at least 12 months in advance, and include profiling around daily bank balances. This will highlight any troughs from month to month which is important as it may impact your banking relationship significantly.
Any major bank will be more willing to help and meet you halfway if you have put in the effort to collating accurate data for them.
It’s also more important than ever to pay debts on time, and ensure you don’t let any of your own invoices slip through the cracks.
The final key element is tax. Temporary tax changes made at the end of April following COVID-19 have arguably been the most significant since 1991.
In the new tax proposals, businesses expecting to make a loss in either the 2019/20 year or the 2020/21 year will essentially be able to potentially carry the loss back one year.
To find out more, contact BDO. The firm has also developed a microsite with practical guides to help businesses identify, address, and navigate the risks posed by COVID-19. You can access the microsite at the following URL: https://www.bdo.nz/en-nz/covid-19?utm_source=stuff&utm_medium=sponsored%20content&utm_campaign=continuity%20plan