It seems like every day, new consequences and fallout from the pandemic continue to appear. As well as the big corporate collapses like Virgin Airlines that get a lot of media attention, there are also small businesses disappearing every day that we don’t hear about.
I read an alarming statistic recently: the ATO has approved over 800,000 payment plans for small businesses in the last financial year. It does not seem likely that many of these businesses will be focusing on paying off their payment plans in this environment.
With our economy losing $4 billion a week, for every week we are in lockdown, combined with hundreds of thousands of small businesses who were already struggling with cashflow before pandemic, it seems like the worst is yet to come.
It would seem that advisers and accountants will be front and centre when it comes to helping these business owners navigate their way forward. Many will need to declare bankruptcies, and the lucky ones will be able to pivot in time to be able to generate income in new ways moving forward.
It’s a real dilemma for a planner/accountant when deciding how to charge for these unexpected services. Where a time/cost ratio is more likely to be utilised for accountants, for planners, who are on retainers, this coming deluge of client work may well need to be serviced under existing financial arrangements.
This only places more pressure on planners, as they struggle with their own rising business costs, and navigate ongoing education requirements, in addition to changing their own business in the COVID-19 environment.
It may well be a good idea for advisers and accountants to start doing their own client reviews - particularly of your larger value clients to make an assessment of what they might need moving forward. This may help you plan capacity for your business, but also to proactively reach out to clients and ask what help might be needed.
At the moment cash is king, and those with strong balance sheets and an ability to lower fixed costs are okay. But those that have faced total change to their business model are going to need more of your support and advice than ever before.
This is yet another challenge for advisers on delivering to clients they already have, as well as the challenge of new business. Planning capacity before the work happens will be the key to getting through it.
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