Bay accountants are "very busy" after lockdown. Photo / Getty Images
Business owners' biggest post-lockdown concerns are for their cash flow and the impact of wage subsidies coming to an end, Bay accountants say.
However, many have confidence in their team's willingness to do what it takes to survive, with the lockdown giving some a new outlook on future business ventures.
Maria Palmer, of Absolute Accounting in Rotorua, said uncertainty still existed among clients post-lockdown but less so than during the initial phase of the crisis.
Palmer said many clients were in hibernation until tourism picked up again and there were a few "start-ups".
"People [are] choosing to go into business as a result of losing their jobs or changing in direction."
Clients were needing most help with determining their financial position, evaluating the effectiveness of their business operations and establishing a plan for progress.
Palmer said not being able to generate income, paying their bills and keeping staff on was what clients were most concerned about.
"Morale is lower as they are worried about cash flow, the future of their business and their employees," she said.
But, she said, clients were most confident about their core business offerings.
Her advice to help people move forward post-lockdown was to look at their business opportunities and strengths, focus on customer engagement and be proactive, not reactionary: "Plan, plan, plan".
Director of Pearce & Co Accounting Limited in Rotorua, Alex Pearce, said he had seen an increase in clients since lockdown.
Pearce said the feeling among clients post-lockdown was mostly positive but with some apprehension due to uncertainty about the future.
He said the majority of clients had a resilient mindset.
"Some have seen opportunities that were not there before, which they are acting upon now, and when business returns to normal they will be better placed with more efficient - and a greater variety of - revenue streams.
"A small handful of other clients who were struggling with business prior to lockdown have felt this as the nail in the coffin.
"They simply do not have the resources, time or years ahead of them to fight to get back to square one again."
Pearce said clients were mostly seeking a sounding board and some direction.
Many had sought help understanding the eligibility criteria of the Government's wage subsidies and small-business cash flow loans during lockdown, he said.
Now they were mostly seeking help with understanding the tax relief measures and the impact these will have on future cash flows.
"Our clients are generally most confident that if they can battle on through to November 2020 and things return to further normality, then things should be all right."
Chartered accountant at BWT Financial in Rotorua, Tim Wild, said most business owners were nervous about cash flow.
"But I am hearing many clients are flat-out and have lots of work in front of them."
Wild said clients were seeking help with subsidies, the IRD tax remission policy and cash flows.
His advice for small business owners post-lockdown was to be in regular contact with customers who owe money and review unnecessary spending.
KPMG private enterprise partner in Tauranga, Tracy Preston-Lett, said naturally some clients were feeling the pressure of an unpredictable outlook.
Some were constrained in terms of their financial position, exposure to an impacted industry or where their strategy was now threatened and were rethinking their short and mid-term plans.
"Others, however, have capitalised on the headspace from the enforced lockdown to consider their business post-lockdown world, with a new perspective and are now activating those plans," she said.
Clients had a "mixed bag" of needs, including understanding what government support they can access, and had run various webinars to address Covid-19 issues.
Business owners were feeling a range of emotions as they kickstarted their businesses again, she said.
"There are a lot of unpredictable headwinds to navigate and many sit outside their control, such as election outcomes, government support, economic outlook, global factors and credit availability.
"They're probably most confident about their own teams and the willingness of those people within the business to do what it takes to survive."
Director at Ingham Mora in Tauranga, Tom Beswick, said his team had been busy during and post-lockdown, mostly helping existing clients to "get through".
"We have taken on 10 staff in the last three months as a result of growth so we are confident in things bouncing back."
He was aware of only a few clients who were "severely impacted" going forward but he did not tend to have many retail, hospitality and tourism clients.
Beswick said clients were needing the most help with understanding government announcements so they could get what they were entitled to.
"Clients often need our help to negotiate payment plans with the IRD and also to help get them of penalties and interest for any payments they were late in making due to Covid-19.
"I think a lot of people thought the IRD was just going to write those penalties off automatically but there is nothing automatic about it."
Some were also needing help with planning for the future, he said.
"Many were hunkered down and relying on subsidies and savings to get through the lockdown."
Beswick said his clients - who were generally trades and construction businesses, orchard owners, or commercial and residential rental owners - were more emotional during the lockdown compared to now.
"Many are stressed about a post-wage subsidy environment, especially over winter," he said.
"There is a lot of uncertainty out there on what happens when wage subsidy round two expires."
While many businesses were running "full steam" now they were uncertain about what was next and whether this was a false bounce back.
"Certainly all are thankful in the area that we are still building houses and were able to pick the kiwifruit."
Beswick encouraged people to talk to an accountant, as many businesses had historically relied on copying last year and that was the business plan.
"Unfortunately that won't work going forward so people need help," he said.
"The main thing I'd say is 'fly alone, die alone'. This means if you try and do it all yourself it will be very much harder."
Pearce & Co Accounting Limited in Rotorua
1. Take a look at your financial position today. Who do I owe and who owes me? What are my current funds available for the future?
2. Prepare a 12-month cash forecast based on the business model today. Can the current strategy provide sufficient cash to cover operations? Do I expect more from my efforts and risk in the business?
3. Create a strategy to change the cash outlook if you are not happy with it. Cover the basics first: Am I invoicing too slow? Do I have problem customers not paying or paying too slowly? What expenses can I reduce that don't add value?
4. If this doesn't resolve the issue, move on to a wider change in strategy. Can I increase revenue through the existing market/customer base? Can I redeploy my resources to create a different revenue stream?
5. Put a system in place that helps you measure what is critical to achieving these outcomes. Set a few key things to look at monthly to ensure your strategy is working or if it needs to be tweaked.
6. If possible, establish cash reserves to allow bills to be paid for 2-3 months.
7. Keep paying GST and PAYE if you can – these taxes are collected on behalf of the Government and getting behind in these can create serious problems for your business.
8. Save for tax, put it aside in a savings account for when the tax falls due and don't touch it!
9. Stay alert to what is happening that could affect your industry or business.
Absolute Accounting Rotorua
1. Look after yourself – put the oxygen mask on yourself first.
2. Determine your financial position and financial health, (both personal and business).
3. Determine your immediate cashflow requirements.
4. Evaluate how your market has changed.
5. Evaluate the state of your business operations.
6. Review your business model and strategies.
7. Establish a new plan.
Absolute Accounting Rotorua
1. Issue invoices immediately and make sure you are staying on top of what is owed to you.
2. Negotiate payment terms with suppliers to manage your cash outflow.
3. Analyse your spending – is it necessary.
4. Use technology for efficiencies to gain both time and cost benefits.
5. Be proactive and take advantage of all government support options available eg subsidies, grants etc.
Pearce & Co Accounting Limited in Rotorua
1. Cash is King in this climate! It's no good bragging about margins if you are not going to be paid until months in the future.
2. Bring financial information all together regularly. Who do you owe? Who owes you? How much cash do you have?
3. Set a forecast and stick to it. Having no plan is a plan to fail if cash flow is tight for you.
4. Monitor key aspects of your business monthly – these could be sales targets, days it takes a customer to pay you, amount of cash reserves to keep on hand. They will be key indicators that are critical in achieving your forecast or strategy.
5. Communicate, communicate, communicate. Keep relationships up with suppliers and customers, discuss strategy with your business advisors, talk to the IRD if you are struggling to meet tax commitments, communicate to your staff your plans and how they play a part in it all.
Access New Zealand's best journalism with our special offer on Premium subscriptions.