Updated 22 March 2020:
The staged total economic relief package so far from the Australian Government and the Reserve Bank of Australia is valued at $189 billion.
Assistance to business to keep people in jobs include:
1. Wage subsidies of up to $100,000 (minimum payment of $20,000) for eligible SMEs and NFPs that have an annual turnover under $50 million and employ workers.
Read the Fact Sheet: Cash flow assistance for businesses
2. Temporary flexibility in the Corporations Act 2001 allowing debtors and company directors more time to respond to statutory demands from creditors. Extended thresholds and response times will apply for 6 months.
Read the Fact Sheet: Temporary relief for financially distresses businesses
3. Until 30 June 2020, the instant asset write-off threshold for businesses with an annual turnover of up to $500 million increases from $30,000 to $150,000.
Read the Fact Sheet: Delivering support for business investment
4. Small businesses employing fewer than 20 full-time employees who retain an apprentice or trainee as at 1 March 2020 can apply for a wage subsidy of 50 percent of the apprentice’s or trainee’s wage paid during 1 January 2020 to 30 September 2020. (Maximum of $7,000 per quarter per individual.)
Read the Fact Sheet: Cash flow assistance for businesses
5. Coronavirus-affected regions and sectors, including the airline sector, will benefit from recovery plans valued at $1 billion.
Read the Fact Sheet: Assistance for severely affected regions and sectors
6. The new Coronavirus SME Guarantee Scheme will support SMEs to get access to working capital loans. The Government will guarantee 50 percent of new loans issued by eligible lenders to SMEs.
A third economic stimulus package may be released in the coming weeks. Stay tuned.
On 12 March 2020, the Morrison Government announced its $17.6 billion economic response to the Coronavirus to keep the Australian economy out of recession in the wake of the pandemic.
The Prime Minister’s message: Keep businesses in business and people in jobs.
Benefits for small to medium businesses
A large part of the economic stimulus package is intended to support small and medium businesses to keep the doors open even as businesses experience “a cashflow crunch”.
A summary of benefits available from the Australian Government:
- $1.3 billion to pay half the wages of apprentices and trainees in small businesses with less than 20 employees. (For the period 1 January 2020 to 30 September 2020.)
- A tax-free payment between $2,000 and $25,000 for an estimated 690,000 small and medium-sized businesses employing almost 8 million Australians.
- Expansion of the instant asset write-off scheme. Businesses with a turnover of up to $500 million can access instant tax write-offs of up to $150,000 per eligible item.
- Accelerated depreciation deductions through to 30 June 2021. Businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
- $1 billion to support severely affected regions, such as those heavily reliant on industries such as tourism, agriculture and education.
Download free resources for accounts receivable management
Key messages in the Australian Government’s economic response
The message to Australian businesses and workers from the Prime Minister:
- Keep businesses in business
- Keep workers in jobs
- Pay your suppliers on time
- Economic forecasts will be updated in the May budget
On releasing the economic response package, Scott Morrisson was quick to establish his confidence that the Australian economy is solid enough to withstand the economic impact of the Coronavirus. By keeping the engine room of business running with people in jobs, he’s assured the public that Australia will “bounce back strongly on the other side.”
Earlier, in anticipation of the economic stimulus package, Tim Reed, President of the Business Council of Australia, said on morning television show Sunrise, that the economic boost needed to “go big and go early.” He pre-empted that if the economy needed further stimulus down the track, “the government would have capacity to come back and do more later on.”
The Economic Response package will go before the Parliament in the final Autumn sitting week in March 2020. Following that, the Government will announce any supporting instruments for businesses to access the stimulus package.
5 Things Businesses Can Do to Build Resilience
In times of cashflow stress, businesses should focus on measures that build business resilience now and for the future.
1. Shop for deals
Every business wants cash to keep flowing through the coffers. Everything becomes negotiable. Whether you’re buying or selling, be prepared to negotiate on price, service and payment terms.
2. Reward customer loyalty
Your current customers could be hurting, too. Reward loyalty through tough times with a one-off discount, deals on stock or service, or extended payment terms (within reason and your own budget).
Your customers will remember your kindness, empathy and flexibility and that’s what you want as you emerge from the downturn and get back to business as usual.
3. Clear slow-moving stock
Your business should always be monitoring stock levels. Now more than ever, your chances of selling slow-moving stock could decrease. Look at innovative ways to clear this stock: bundle with other items, bulk discounts, or giveaways with purchase.
4. Plan for staff absences
Your staff may be absent from the office during a virus pandemic. Consider how you will still get the job done as people work from home or take sick leave. Technology could be a saviour here, particularly automation technology and online services that keep working whether your office is open or closed.
With ezyCollect, for example, all your accounts receivable communications to customers will still be generated, and you can still accept payments via an online payment portal.
5. Plan, Plan, Plan
Spend more time on your budget and cashflow forecasts. Do more financial modelling. Think about the worst case and the best case scenarios so you can clearly understand your financial parameters and work within them.
For more strategies, read our blog 10 Strategies to Protect Your Business In an Economic Downturn
For further information
For more information on the Australian Government Economic Response to the Coronavirus:
Click here for a Fact Sheet on the Economic Response to the Coronavirus.
For more information on the Australian Government’s response to the Coronavirus:
To get your business started with ezyCollect today: