Are You Ready For The End Of JobKeeper?

Unless your business was severely impacted by the Covid-19 related restrictions over the past 6 months, you may find you currently have a comfortable amount of cash in your bank accounts as a result of the cash boost, payroll tax and JobKeeper assistance.  Regardless, for many businesses the support received to date is about to run out or be reduced.

So… Have you looked beyond September? Do you know what your profit and cash balance might look like over the next 12 months? How do you best deploy the cash you currently have in the business bank account?

If you haven’t done this already, one of the most important things you can do right now is a 3 way forecast.  A realistic and detailed forecast is crucial for guiding your business to tackle unexpected challenges and to ensure you stay on track during these uncertain times. A 3 way forecast is the most robust type of forecasting as it brings together your balance sheet (working capital, assets and loans) and your forecast profit to help predict your cashflow into the future.

Many clients tell us that due to the uncertainty of the current times, it is impossible to look forward.  However by doing a 3 way forecast we have been able help our clients to:

  1. know what costs are ahead and therefore know the minimum sales required to meet those costs – this is called a breakeven analysis;
  2. keep track of the payments they have deferred paying (tax, rent etc) to ensure the business has enough cashflow to pay them in the future;
  3. run various scenarios regarding the 12 months ahead – what happens to my profit and cash flow… If my sales are down 15%? If we lose a major client?  If my staff work 4 days a week?  When the government stimulus runs out?  If we pay ourselves a dividend?  If our clients start paying us slowly?  If I buy this important piece of equipment for our business?…  The scenario planning options are endless; and
  4. track actuals results against the forecast for the year identifying warning signs for the business and making decisions before it is too late.

Running your business without a forecast is pretty much like driving a car in the dark without the headlights on…

By taking the time to set are 3 way forecast and managing that forecast, you will give your business the best chance of survival and even growth during these uncertain times!

If you would like to have more certainty about your businesses future, please contact your Harris Black team member.

The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.

At Harris Black, we’re driven by a simple focus: we help; you achieve.

Click here to find out more about Harris Black’s approach and how they can help you achieve your financial goals.

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