Show me the money!

by Jul 8, 2020Financial Management

A really helpful conversation from three experts on how to navigate through these uncertain times with a financially viable business at the other end…..

This is really well worth a listen!  If you don’t have time, then see my summary notes below! 

Dheeraj Sachdev…….

This is an opportunity to reboot your business – get back to basics.

Ask yourself “what do you want to achieve”

  • How have you been tracking up until now?
  • What has the business been consistent at?
  • What has it not been consistent at?
  • What’s working
  • What’s not working

Aim for more consistency as that enables a business to scale

Look at other business’ in your industry.  Who is doing well in this environment?  What are they doing? What are they not doing?

Are you still able to operate during lockdown?  If not, how could your business continue to operate?  Do you have an online presence?

Ask yourself, “What resources to I need?” to continue to operate?  Money / People / Products?

Use this ‘covid’ time effectively

  • Improve the systems and process’ of the business
  • Look at your people – what is efficient / what could be improved

A $ Saved Is A $ Earned!

Aim to generate internal revenue –

  • Look at each individual products and service – are they profitable
  • Can you get a better price from suppliers to save money
  • Look at your entire portfolio of products and services and do a proper costing so you can identify your most lucrative products/services

REIMAGINE AND REINVENT to suit the current business climate!


Is what you’re spending useful?

Yes we need the basics of electricity and phones, but is there another supplier that can give you a better rate, enabling you to save money.

Return on Overheads:

Are your suppliers delivering you value?

Do you need the Telstra phone if you don’t travel into regional areas? Could you find a cheaper phone/provider that still meets your needs

Look at your Working Capital:

Need to ensure that you recoup the money that’s owed to you.  To save time and your relationship with your client – engage a debt collector.  They are more professional at it, know how to do it most effectively and are absolutely worth the cost as it will improve your working capital situation.

REIMAGINE AND REINVENT to suit the current business climate!

Dheeraj Sachdev

Bookkeeper, First Class Accounts, Parkdale

Martin Cattach…

What are your key insights for small business at this time?

Small business owners must change mental attitude from experienced and go back to the day you first started.

Think like a start up again

Look at everything with a fresh mindset

How would you do things differently if you had the opportunity to start over? – this is your  opportunity right now.

Reduce sense of what you’ve lost and open up opportunities of what you can gain.

Competitive landscape has changed – market will have shrunk a bit but also there is an effect on your competitors – If you’re someone watching this episode – you’re on the edge, being able to go back to market with a rethought through business – Up to 30% of business in the hospitality industry, may not reopen.  This is your opportunity to ensure you’re not one of them.

How can business owners grab hold of opportunities?

Never been a better time to reset your trading terms.  – working capital and cash flow are crucial

Go out to customers – say something like “we used to have 30 day – and you used to pay us in 60 days – now we have 7 days trading terms and you need to pay us in 30 days”

Creditors – have a little more financial weight be hind them – request to extend trading terms –

Shorten requirements of working capital and you’ll be able to do more with what you have

Most business’ have a customer base already – start / keep communicating with them and let them know you’re in business

Start to rebuild relationship with customers – reduce stock levels –

Start dropping the inventory

Greatest Opportunities at this time is to improve situation with:

  • Debtors
  • Creditors
  • Inventory

Banks – In the next two years, banks won’t be too helpful to business sadly – there are other methods of finance – trade finance and debtor or invoice finance will give you some additional flexibility that you might not get from the banks

Debtor book – able to get 80% of the value of those receivables on day 1 freeing up cash to do what you need

Trade Finance – on what you need to purchase to operate your business

Instead of using your house as security

Cost to do this: It is more expensive than a bank overdraft (10-12%)  These tools are approx 1.5%-2% per month – so if you have a decent margin its a good option

Debtor insurance:  to cover if your customers go under

How would you do things differently if you had the opportunity to start over? This is your  opportunity right now!

Martin Cattach

Business Finance Specialist, Finance For Business

Andrew Poulter….

3 amendments the government has made to insolvency laws since covid began:

  • The time within which a creditor needs to wait before to take legal action (was 21 days – now 6 months)
  • Increased the amount that must be owed to take legal action (from $2000 – $20000)
  • Exempted company directors from liability for trading while insolvent (to prevent involuntary insolvency)

All expire in September 2020

The Result:

The number of insolvency appointments that have occurred – very few people are applying for winding up orders – very few files being lodged with ATO

What provisions are there to enable business to recover or the best way to not recover

Holding Deed of Company Arrangement

Is an alternative to winding up = enables company to survive with balance sheet reconstituted – contract between the company and its creditors – where the creditors agree to accept less than 100 cents in the dollar of what they are owed in exchange for contributions from related parties / directors / no dividends –

A document that says nothing will happen for a period of time until certain things occur

Biggest road block is uncertainty

A moratorium on creditor actions seeking payment for a period of time – which gives the company some breathing space to recover.

Biggest road block for business owners right now is uncertainty

Andrew Poulter

IRT advisory

Please, give us your feedback!  We’d love to know what you’d like to hear about in future shows

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Discover the working capital opportunity post covid-19

A Consultatation with Andrew Poulter – discuss how changes to insolvency legislation may impact your business

There has never been a better opportunity to start again, with all your experience to date and the support of the BB4G Experts – Let’s make this time worth it.

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