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28 BUSINESS THROUGH INNOVATION FINANCE TWHEN TIMES GET TOUGH he events of the past regularly so they understand the few months have been changing environment. Ensure you seek extraordinary. We’re starkly specialist legal advice before making reminded of just how decisions affecting employment terms. month in the previous year) re sales and purchases. This can be extracted from POS reports (and 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 your suppliers and other creditors, so if you can’t pay the entire amount owing, 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 to cement the deal. None of these steps is easy, but in the overall circumstances, everything is on the table for negotiations. Recognise that your business might be under financial pressure, but so too are the other businesses you rely on. So, be fair and reasonable in your requests and hopefully you’ll benefit. If everyone can adapt now to deal with the macro crisis, our futures will look brighter, sooner. interconnected the globe 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. 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, being vital in providing the community with safe and regular medications and the necessary advice and reassurance. Staff need to feel safe while undertaking their roles and be confident they will have paid work for as long as humanly 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. Regular cleaning of counters and equipment and similar sensible actions are routine. 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 individual staff members. Potentially there may be a need for some staff to have reduced hours or be stood down, which can be very difficult. But the best approach is to communicate 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 have been distressed at not being able 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 while 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 future sales should fall to 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 federal 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 provide some relief, but considering pharmacies have obligations to pay premises lease, bank loans, suppliers as well as 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 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. Accountants specialising in Pharmacy www.pinndeavin.com.au Neil Featherstone (02)85253700 Neil Featherstone 30x190.indd 1 RETAIL PHARMACY • JAN/FEB 2021 19/1/05 8:38:24 AM 2019-1-11_PinnDeavin_StripAd_Proof.indd 1 11/1/19 1:26 pm