How can you take a more active role in assisting your clients?
Facing the challenges of the current economic climate, advisors can take a more active role to assist, and support clients to analyse clients current business structure, and assist in implementing change to achieve growth.
The key areas for analysis have not changed. A keen review of cash flow, working capital, expense minimisation, and revenue generation has always been available to assist clients. However, coming out of COVID-now more than ever-such analysis of these key areas will assist clients to structure repayment plans with the Australian Taxation Office (ATO) and other major creditors such as landlords and State Revenue departments. In particular the ATO is adopting a more open dialogue with business to achieve repayment of 'COVID hangover' debt. Also beneficial is a review of current finance facilities, current obligations, and impact of changing interest rates to allow business to accurately develop cash-flow projections and manage debt levels.
Uncertain and unpredictable times appear entrenched at least for the next 12-18 months as climate and world events impact domestic supply, demand, and cost factors. Hence, advisors can provide real-time benefits via timely and regular meetings to discuss month-on-month challenges. Discussing the following points is a sound introduction to risk management:
- Does the business require more access to working capital to meet market shocks?
- Has the business sufficient client/service spread in case of client failure?
- Is the business vulnerable to key employee movement-what is the business doing to attract and retain staff?
- Is the business adequately reviewing revenue trends month on month, year on year and actively and regularly discussing risks and opportunities?
- Does the company have an active cost review process?
While we see that the ATO is currently responding constructively to the pandemic effects on business' ability to repay core debt, this policy will not continue indefinitely as there is an expectation that businesses need to address this issue now. Advisors are therefore in the unique position to assist clients through this 'grace' period.
Regular communication and assistance are key to business survival and growth in 2023 and beyond. More and more we see advisors fulfilling the role of "independent board advisor" to provide key advice to bring about key change.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.