Page 41 - rp-may-2020

BUSINESS THROUGH INNOVATION FINANCE
39
RET AIL PHARMA C Y • MA Y 2020
Accountants specialising
in Pharmacy
Neil Featherstone (02) 525 700
www.pinndeavin.com.au
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WHERE TO FOCUS WHEN TIMES GET TOUGH
T
he events of the past few
months are extraordinary.
Things are tough for individuals,
families, communities,
businesses and governments.
We’re starkly reminded of just how
interconnected the globe really is and
the collective impact of the actions and
intentions of individuals.
I’ve spoken to many pharmacists since
the COVID-19 crisis unfolded and there
are stories of fear and stress. However,
pharmacists should also have some
sense of satisfaction knowing they’re
going well beyond normal expectations
in serving the community. In some
ways, pharmacists have had a more
extreme experience than most. They
need to deal with anxious customers
while trying to operate their community
pharmacy business to the best of
their ability. The uncertainty on many
levels as the situation changes daily
is unprecedented for most of us. It
provides some insight into what it may
have been like during wartime.
Pharmacists have needed to adapt
quickly to comply with government
requirements while meeting the needs
of their customers and staff. Owners in
particular have three main resources that
require their attention:
Staff
Our team is our most valuable asset.
They’re vital in providing the community
with safe and regular medications and
the necessary advice and reassurance.
They need to feel safe while undertaking
their roles and be confident they’ll
have paid work for as long as possible.
Pharmacies around the world have
adopted safer workplace measures
to help protect staff from exposure
to infection, as well as encourage
customers to treat them calmly and
respectfully. We’re now used to seeing
control of foot traffic inside the shop,
maintaining safe distances and creating
appropriate personal space, along
with regular cleaning of counters and
equipment and similar sensible actions.
Where pharmacies need to restructure
rosters, owners are being respectful
when allocating shifts to recognise
the needs of the business as well as
the expectations of the individual staff.
Potentially, some staff may need to have
reduced hours or be stood down, which
is very difficult. But the best approach
is to communicate regularly so staff
understand the changing environment.
Ensure you seek specialist legal advice
before making decisions affecting
employment terms.
Stock
Access to certain stock lines have
been limited – for example, respiratory
related medications. Some pharmacists
report that smaller suppliers have even
requested prepayment at the time of
ordering. Our rural clients appear to
have been the hardest hit, and they’ve
been distressed at being unable to
supply their regular customers on a
‘normal’ basis. Nobody wants to say no.
Pharmacists have needed to use their
compassionate and technical skills in
keeping their communities safe.
Cashflow
Most of our clients have reported
significant increases in sales during
February and March as customers
attempted to stock up their supplies
at home. This creates an artificial
situation where cash inflows in the short
term are inflated, so logically, at some
stage, sales should fall to be below
average (as customers rely on their own
‘inventory’). It’s imperative for every
pharmacy owner to be guarded with
their cashflow now and over the next
six months or more, to retain a buffer to
help deal with future uncertainty.
The government has designed a
stimulus package for the March to
September quarters, which ensures
assistance will automatically flow
through to employers, via the existing
BAS/PAYGW. The larger the employer,
the more the assistance. This will give
some relief, but considering pharmacies
have obligations to pay premises lease,
bank loans, suppliers and staff, it isn’t
the sole solution.
Everyone needs to create a simple
cashflow budget. Start by examining
last year’s monthly trading (ie, same
month in the previous year) in terms
of sales and purchases. This can be
extracted from POS reports (and also
prior-year BAS management reports)
to provide a rough reference baseline.
Then examine current staff rosters and
rent, to understand changes in costs.
If you perceive you’re likely to have
significant cashflow problems, consider
the following measures:
• Approach the landlord for assistance/
time to pay.
• Liaise with your bank to renegotiate
payment terms for the near future.
• Communicate early with suppliers
and other creditors, so if you can’t pay
what’s owed, you have a payment plan
to respect their cashflow, too.
• If you have quarterly PAYG instalments
to pay or an upcoming tax assessment,
consider asking the ATO for a payment
arrangement. How much can you
afford to repay per month? Expect to
be required to pay an upfront lump
sum amount to cement the deal.
By Neil Featherstone.
Director
Pinn Deavin
Neil Featherstone
is a director of Pinn Deavin,
a leading accounting, management consulting
and investment firm. Neil has been advising
pharmacists since 1984.
Inquiries:
neil@pinndeavin.com.au or
02 8525 3700.