For business owners vigilance is required and the old age of Cash is King rings very true at this time. So what can we do to respond?
- Look into the Wage Subsidy Scheme and other support available under the government’s Covid-19 Financial Support package and apply immediately if you are eligible.
- Review your cash forecast for the next 4-5 months, develop best, medium and worst-case scenarios. Understand where there are opportunities to improve your cash conversion cycle. These actions may include;
- Politely collect any funds that are owed to you and where possible consider shortening payment terms. Your customers are likely to also be experiencing impacts on their business which may impact on yours if they aren’t able to pay you
- Converting inventory/stock to cash through sales promotions
- Negotiating payment terms with suppliers and cancelling any orders of parts or goods that you don’t believe you can convert to cash quickly
- Talk with key parties such as your lenders and investors to negotiate access to funding and lending facilities
- Have early discussions with IRD, landlords and other key parties including critical suppliers to negotiate supply terms, payment plans and payment holidays. To this end, take a look at the business cashflow and tax measures that IRD have established
- Reduce non-critical spending but be mindful of the impact on reducing staff numbers if those staff are critical to your business post-crisis. Consider other measures for critical staff such as a reduction in hours, bringing forward annual leave, temporary reduction in remuneration. With a pandemic, think about how you will have coverage during periods of sickness
- Defer non-critical capital expenditure that can be delayed
- Continuing to identify the risks in your supply chain including; availability of raw materials, parts and goods; restrictions on transportation of raw materials, parts and goods; financial stability of the supplier (particularly around critical infrastructure such as IT); alternative sources of supply
In a rapidly changing environment, we will continue to bring you updates on how you can respond.
Stay safe everyone, together we’ll find our way through.
Riria Te Kanawa
National Māori Sector Lead
KPMG in New Zealand
About our guest contributor
Riria Te Kanawa joined KPMG in June 2015 and is a Director in the Performance Consulting team. Riria drives KPMG’s work with Māori organisations and businesses and she ensures that clients can access the right expertise within KPMG that is matched to their needs. She has 19 years’ experience as a chartered accountant and as a former business owner has extensive experience in advising clients in financial management, strategy design and execution and business planning. She helps client challenge and test the status quo and has an active interest in helping clients apply human centred design principles to design organisational strategy, improve operational performance and identify and pursue growth opportunities. Riria is the lead author of the Maui Rau report series that looks at how Maori might take advantage of the shifts in the world to advance prosperity for their people.