Cash Is King (but so are other Things)
By Gerard Walz

Cash belongs to the Staff, it belongs to the Creditors, it belongs to the Government, it belongs to Lenders, it belongs to the Customers. In these troubled COVID19-addled times, Cash is even more of a King than before.


(In the interests of readability and space, hereafter, references to “he/his” are to be read as inferring multi-gender references and are not intended or construed to be in any way, shape or form, gender discriminatory.)


All the stimulus packages put up to the Country are all about Cash – granting Cash to JobSeekers, granting Cash to those fortunate enough to be JobKeepers, granting Cash to business albeit via BAS/IAS returns, granting banks government security over Small Business Loans, local government grants to SMEs et al. It is all about getting Cash, not necessarily folding stuff since it can be “held” to be being a COVID19 carrier, into business’s bank accounts, consumers’ pockets or debit and credit cards in an attempt to give the economy a big re-boot and to give Australians some degree of comfort that they are in fact, well, a goodly number of them at least, being looked after to some useful degree by their elected officials – Local, State AND Federal.


The “relaxing” of directors’ responsibilities to effectively not run their business whilst insolvent, for 6 months, doesn’t excuse them from not running their businesses at all. Directors are still required to run their businesses and therefore need to continue, despite the troubled times, to manage their businesses factoring in the dynamic changes that are occurring as best they can. Budgets and Cashflow projections need to be reviewed even more than they may have been in the past. The originally prepared budgets and forecasts will have changed markedly. Key Performance Indicators (KPIs) need to be continually analysed to help assess the performance of the businesses. The likes of Coles and Woolies must be “smashed” by the impact of hoarding stupidity that occurred following the COVID19 shutdown announcements and, of course, Bunnings which has had an enormous shot in the arm (despite there being no vaccine available, aside from Coopers’ Ales) with the DIY jobs around the home (mine included) being undertaken by those now responsibly staying at home or forcibly staying at home. Managing these unprecedented times requires the usual high degree of diligence – there is now something of a different focus for business – what are my historic KPIs looking like, what are the new KPIs looking like AND what opportunities are there for my business in these changing/changed times.


All the regular jobs of managing a business need to be done: staff being paid (including Superannuation contributions), the creditors’ terms being met albeit renegotiated where possible, the PAYG-W, the GST, the PAYG and the Payroll Tax liabilities being reported and met, the Lenders repaid subject to renegotiated terms, Debtors chased up, yep, subject to renegotiated terms. Margins need to be monitored and not let slip too far lest they fail as a KPI. Obviously average days debtors and creditors and turnover ratios will alter, however, they cannot be let go to seed. There needs to be flexibility built into the Budgets and Cashflow forecasts.


Next year’s Budgets and Cashflow forecasts will need to be prepared with COVID19 influences factored into them significantly. Assumptions will definitely need to be researched and recorded/reported, even more so as the current environment is so very very different to that experienced post-WWll. The market(s) businesses work in will need to be carefully researched for size, materials availability, production availability, deliverability, point-of-sale etc, basically all the usual “stuff” as well as new opportunities. Thinking “outside the square” is probably never more important.


The KPIs that business owners use may well need to be changed – maybe they should consider an “original v actual” analysis so that the impact of COVID19 can be measured rather than just being notionally observed as a KPI. This can help business owners better understand the mechanics of their businesses when presented with significant unprecedented external stimuli – good and bad. It can also help business owners react more effectively/efficiently to significant unprecedented external stimuli – good and bad – “ahh, remember the COVID19 of 2020 and its impact on our business/industry/economy, we did this and implemented that and this was the outcome and this is what we could have done better and this was what worked perfectly…, also remember we responded decisively with good reason(s)”.


It is very important that, and it goes without saying, but I will, without cash to enable the business to produce its goods and/or services tangible or intangible, Customers won’t be able to buy what the business produces which means the bank account will be empty which means no money to pay the skeleton or working-from-home Staff, the Creditors, the Governments and the good folk Lenders, a business version of the infamous Catch 22.


The Business owners/directors need/must have systems to be in place, hard and soft, that can report simply and quickly to provide useful KPIs.


The positives from all this COVID19 experience are the very learning of how flexible we are, how flexible our business and governments are/can be and how better managed our businesses will become. The negatives are the likelihood of businesses not surviving, not because they weren’t managed appropriately but because the World will fundamentally change and be changed potentially for the worse for some – we will buy and sell differently, we will deliver our products and services differently, there will probably be less folding cash literally changing hands as virus-free debit and credit cards are waved at the EFTPOS terminal.


Are your systems, hard and soft up to helping you?

Of course, help is at hand – Condon Advisory Group can review your business, can help you with KPIs and help you with reporting and planning.

Just wish I could get back to Rep Coaching.