Accounting Automation
While SMEs account for 35% of the Australian GDP they were one of the most impacted businesses when COVID-19 hit in 2020 — specifically, SMEs in the hospitality and food industry. A study conducted by the Reserve Bank of Australia (RBA) showed over 60% of businesses surveyed reported more than 50% of a decline in revenue; SMEs were twice more likely to report a greater decline. Bloomberg reported about a 15% drop in consumer spending and a total revenue loss of 1.5 billion AUD a week. While the RBA expects a robust economic recovery after the lockdowns, we’ve gathered information that may help SMEs navigate these few more months of uncertainty.
Accessing Loans
According to The National Law Review, SMEs are less able and less willing to take out private bank loans for their businesses. There are two sides to this issue. On one hand, commercial banks are less likely to approve loans for SMEs, especially if they deem the businesses are financially struggling or at a risk of default (which many businesses are during a pandemic). On the other hand, an RBA review found that SME owners were also less inclined to take on debt that they fear they may not be able to repay; especially during times of uncertainty. This means, SMEs that desperately need a bank loan will most likely not be qualified to get one, and SMEs that may be eligible for a bank loan will probably not be willing to take the risk.
The Australian Government’s SME Recovery Loan Scheme allows SMEs to take out loans at favourable conditions. Now in its third phase, the scheme will last until December 31st 2021. The loans have an option of a 24 month repayment holiday and can take any forms of credit. In addition, private banks participating in the scheme are also offering additional loans to help bridge cash flow gaps.
The Australian government has also provided numerous other financial support for SMEs during this time. This includes the Pandemic Leave Disaster Payment, which provides financial support for those who have to quarantine and cannot earn an income, the JobMaker Hiring Credit Scheme, which provides credit incentives to hire employees between the ages 16–35. You can find a full list of the financial resources here.
Understanding Your Costs
Due to the pandemic, businesses have had to cut costs left and right to stay afloat. This reactive decision to the pandemic ensures survival for many firms, but as months pass and vaccination rates increase, you can look to optimise cost cutting with an eye on future growth.
Having a more strategic view of cost cutting can help your firm take advantage of the down time and prepare for reopening. This means rather than focusing on just cost cutting, you should try to understand what drives the main cost of your business and assess how these may have changed within the past year of the pandemic. How has consumer needs changed that may impact your cost? What are the new pressure points that you foresee? What costs seem outdated and how can you better address these significant and inefficient expenses. Taking a well-rounded bird’s eye view towards your costs can not only protect your company during lockdowns, but also position yourself to greater success when lockdown ends.
Putting Technology First
One of the biggest lessons we have learned from the pandemic is the importance of disruption-proofing your business. With COVID, technology has become the great enabler that allows work to remain possible even when everyone is stuck at home. For SMEs, tech integration in their operations are no longer luxuries but essential to the company’s survival. Integrating technology may sound expensive, but there are plenty of options that provide benefits without making a major dent in your expenses. They may even help lower costs by cutting out unnecessary or inefficient processes. With a variety of cloud storage options, advanced automation, and integration platforms, you can reassess what parts of your business can be remote indefinitely; inadvertently providing you with massive savings and efficient workforce.
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