8th February, 2021
The first half of 2021 will see the end of JobKeeper and with it a more digitised business landscape.
A year since the novel coronavirus COVID-19 arrived in Australia, and it looks like it could be six months or more before we have widespread immunisation.
Despite this, advances in the medical sector, in contact tracing, border controls and the introduction of timely lockdowns have all positively influenced the Australian economy.
So much so that Reserve Bank Governor Philip Lowe recently told members of Parliament that growth and employment outcomes have been “at least as good as the upside scenario the central bank published last year,” wrote Colin Brinsden for the AAP.
Government and RBA interventions have also played a part in keeping the economy on an even keel but, with JobKeeper set to come to an end as of 28 March and no vaccine yet in play, business owners and managers will be looking closely for indications of what the second half of 2021 and beyond may bring.
JobKeeper was designed to sustain wages for eligible businesses, and according to a Sensis survey last November, businesses are divided as to whether they’re ready to lose it.
Twenty-nine percent of the survey’s 500 business-owner respondents said the loss would have a major impact, 53 percent said it would have a moderate impact, while 18 percent of respondents said it would have no impact at all.
The research also reveals the impact to be split by geography (with 35 percent of Victorian and Queensland-based businesses indicating a major impact) and industry sector with wholesale expecting the biggest impact (42 percent), followed by manufacturing (40 percent) and retail (32 percent).
“Businesses reliant on JobKeeper cannot assume their business will be viable once this support ends,” said Australianbiz founder and chartered accountant Joe Kaleb.
“Business operators should by now have planned for the end of JobKeeper and put strategies and systems in place going forward.”
Kaleb suggests all cash flow projections are prepared with best- and worst-case scenarios, along with timely financial reporting and other contingency planning.
“Consider everything available to you,” said Kaleb. “Including alternative supply chains, revenue streams and finance options.
“You’ll also want to make certain you are on top of all tax obligations, inventory, debtors and credit management.”
A minority of businesses may find that, with or without JobKeeper, they run the risk of going insolvent in the coming months.
“Temporary changes to insolvency laws introduced as a result of COVID-19 has resulted in many non-viable companies continuing to trade – these have been dubbed ‘zombie companies’,” said Kaleb.
As John Peterson, founding director of Best Practice Group wrote in a recent blog article, insolvencies dropped by a ‘massive 60 percent reduction‘ in 2020.
The presence and eventual loss of such businesses will present further pains to the market, with the recommendation that any business owner finding themselves in such a situation seek professional advice as early as possible.
In May last year, Prime Minister Scott Morrison flagged the creation of JobMaker – a hiring credit scheme designed to incentivise businesses to employ young job seekers (16-35 years).
In no way does JobMaker work to replace the wage replacement scheme of JobKeeper, but it is expected to have some positive impacts for those in a position to hire.
“JobMaker will assist many labour-intensive businesses, but it’s benefits won’t be uniform across the board,” explained Kaleb. “As the scheme applies only to eligible employees, sole traders and partners in a partnership who don’t have staff will see no entitlement.”
Eligible employers will be able to access the JobMaker Hiring Credit for each new eligible employee hired between 7 October 2020 and 6 October 2021.
Please note: MYOB is working to make it easier for employers to handle JobMaker payments right from their accounting software. Find out more about JobMaker for MYOB Essentials or for MYOB AccountRight here.
Ultimately, it seems we can expect to see the fallout from COVID-19 continuing to cause significant disruption and ongoing change in the business community.
But there are indications these changes are creating a more adaptable, innovative playing field.
A recent trend, identified in the MYOB Business Monitor, found that digitally savvy businesses backed by younger owners are showing the most signs of positivity for the year ahead.
“Fifty-three percent of Gen Y business owners expect their business to be more profitable in the next 12 months, 10 points more than national average, and 40 percent reported increased sales in the previous 12 months, compared to the national average of 26 percent,” said MYOB chief executive, Greg Ellis, in reference to the research.
The Business Monitor report, derived from a survey of 1,000 small and medium businesses, was completed at the end of 2020 and found that 35 percent of this sample had moved their business online in response to the pandemic. Of those, 83 percent said it had helped them stay afloat.
“Concerningly, 34 percent of respondents still don’t have any online presence, leaving them at risk of being left behind…” said Ellis.
It seems the big trend here, as we’ve seen repeated again and again throughout the past 12 months, is that the businesses – regardless of how badly they’ve been impact – that are most able to change, are the ones most likely to succeed.
And, in a world that’s increasingly digital, that means taking as many of your business management processes online as possible, quickly.