The JobKeeper scheme will end on 28th March 2021. Since September 2020, over half a million businesses across the country have graduated from the scheme. Despite the schemes success at helping businesses survive during the pandemic there are a number of businesses struggling in industries such as aviation, tourism and the arts and recreation services.

Insolvency experts are encouraging businesses who are facing an uncertain future to act promptly as it is imminent that the ATO will be determined to pursue debts once JobKeeper ends. 

Business owners and directors need to undertake a simple self-assessment to figure out whether, post-stimulus, they have the capacity to pay staff wages, rent, superannuation and tax. It is critical for business owners and directors to act as early as possible if they are experiencing financial distress.

There are many options a financially distressed business can consider taking. It important to know which process is the right one for your situation and when to use it. There is a massive difference between early intervention, a reactive process, a controlled process and being forced to windup. 

It is anticipated that once businesses who are still receiving JobKeeper are given their last payment in April, the ATO will more than likely begin to pursue outstanding debts. 

The ATO’s debt book is roughly estimated to be close to $54 billion and they want to recover this amount of money. As a result of this we can see a wave of insolvency occurring starting from next month. 

Preparing for life after JobKeeper is going to be no easy task for a lot of businesses.  If your business has been relying on JobKeeper payments, there will challenging times for your company over the next couple of months.

With as much detail as you can, it is advised that business owners put together a forecast for the next few months. Get out the spreadsheets and take note of the following; From an incoming perspective: Sales figures (based on both last year and other – more normal – years, plus recent activity), any incoming grants, any royalties, franchise fees or license fees, any investment in the business or any tax refunds. From an outgoing perspective: Office space rental cost, product and operational costs, marketing, salaries and any loan repayments.

Balancing these will give you a positive or negative flow figure. Examine this closely with an accountant if required. As soon as you have a clear understanding of how the next few months will look financially, you can realistically consider making necessary spending adjustments to your business.

The January Sensis Business Index discovered that 39 percent of small businesses believe that the loss of JobKeeper will have a huge impact on their viability. These figures have increased from 29 percent in November and 31 percent in December.

The survey which was completed by 1,000 small-business owners found that another 51 percent believed that the end of JobKeeper would have a moderate impact on their ability to remain viable. One in 10 businesses who were surveyed believed that phasing out JobKeeper would make no difference to their business. 

Identifying where your business is and what are the upcoming challenges can be a tough time for business owners. We are here to help, we work with business owners that are facing adversity and need a fresh set of eyes to help you navigate what’s ahead. Contact us on 1300 023 782 for an obligation free chat.

The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we understand that the insolvency waters are rough and finding advice that focuses on you and your business can be difficult. For advice that is independent and without agenda give the team at C&D a call on 07 36086800 or schedule a meeting here via Calendly. We focus on commercial and practical solutions and are not afraid to have the tough conversations. 

The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)

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Post Author: Craig Dangar

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