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Time to Cash Flow Forecast in NSW

Time to Cash Flow Forecast in NSW

Varun Kumar, Adam Dyson

JobSaver update and things to consider over the coming months

As NSW will soon start to exit lockdown, business owners need to plan for the Government’s announcement to reduce and end the JobSaver payments. Cash flow is going to be one of the key issues many businesses will face over the coming months.

End of JobSaver
The Government have announced the following changes to the JobSaver payment, which will be reduced as vaccination rates increase and businesses start opening again:

  • When NSW reaches 70% double vaccination, JobSaver will reduce from 40% of weekly payroll to 30% and up to a maximum of $75,000 per week (reducing from $100,000). This is anticipated to occur on 10 October 2021.
  • When NSW reaches 80% double vaccination, JobSaver will reduce from 30% of weekly payroll to 15% and up to a maximum of $37,500 per week (reducing from $75,000). This is anticipated to occur by 31 October 2021.
  • On 30 November 2021, JobSaver will end.

We remind you that during this period, the business needs to continue reconfirming its eligibility on a fortnightly basis and if you no longer meet the decline in turnover requirement, you may not be eligible for the JobSaver payment. The following table summarises the changes to the payment:

Relevant dates % of weekly payroll Weekly payment range Non-employing businesses
Current - 9 October 2021 40% $1,500 to $100,000 $1,000
10 October 2021 - 80% double vaccination 30% $1,125 to $75,000 $750
80% double vaccination - 30 November 2021 15% $562.5 to $37,500 $375
We have summarised some issues to consider for businesses below which we are well placed to assist with:
  • Cash flow forecasting - Cash flow forecasting should be undertaken by businesses to consider the cash impact of the reduction in available grants, taking place over the next few months. Understanding your debt covenants and your cash flow requirements to meet your contractual obligations is essential. This is even more crucial when you have provided personal guarantees or security over the loan. When preparing a cash flow forecast, it is important to have a clear understanding of the liquidity you need to maintain to meet your financing obligations.
  • Grants available – The Government have provided a wide range of grants and financial assistance over the last few months, and it is imperative that you maximise the funding your business may be eligible for.
  • Financing – The Government has recently expanded the SME loan recovery scheme which may be available to businesses with a turnover of up to $250 million for a broad range of business purposes. Through this scheme, the Government can guarantee 80% of the loan and businesses can access up to $5 million from the banks if they have been adversely economically affected by COVID-19. Furthermore, through this scheme, banks are offering repayment holidays and loans can be either unsecured or secured.  The expanded scheme applies from 1 October 2021 – 31 December 2021.
  • Lease negotiations – In August 2021, the NSW government announced the requirement for landlords to renegotiate rents with eligible commercial and retail tenants with a turnover of up to $50 million who were adversely impacted by COVID-19.  In negotiating these agreements, landlords must offer tenants rent relief proportionate to the tenant’s decline in turnover. Waivers should make up at least 50% of any rent relief provided and the balance would need to be a rental deferral. If you have not already done so, it may be prudent to speak to your landlord and start negotiations now.
  • Budgeting - Careful consideration needs to be given in relation to all aspects of your budget which may include (but will not be limited to) changes to the level of staffing, amount of stock you need to hold etc. You will also need to critically look at your overheads and determine whether these are still appropriate.
  • Staffing issues – It is important to be aware of the HR issues that come with opening your workplace. FairWork has put out significant guidance on issues employers need to keep in mind including workplace rights and obligations in relation to COVID-19 vaccinations. Refer to the FairWork website for more information.

    With the end of JobSaver and the reopening of NSW, it could highlight changes in staff requirements. It is important to consider your obligations under the National Employment Standards and/or your contractual obligations with your employees. We remind you that any terminations and/or redundancies are subject to “special” treatment for PAYG withholding and superannuation guarantee purposes.
If you would like more information or assistance in relation to any of the above, please contact your local Moore Australia advisor.