This article is sponsored content brought to you by Credabl.
When the true scale of COVID-19 became known, dentists, like many others, were rapidly forced to adapt their ‘norm’. Initially, social distancing requirements meant patient flow began to slow naturally for some businesses, but then stage 3 restrictions and deeming of essential services were announced and this really had an impact on the healthcare sector.
Almost overnight, many practices had to make a plan. Some chose to remain open and offer emergency services, but many closed their doors for what would be the foreseeable future. It’s no secret that emergency work on a day-to-day basis is a small fraction of overall income, so the cost to close or even open the doors, or be available if needed, weighed heavily on the decision for many.
Naturally, much of the decision led to financial considerations. Whether you’re an owner, contractor or employee of a business, absolutely everyone needs to have a plan to manage their finances.
When the pandemic hit, many business owners realised they had low cash reserves. Practices that took the time to drill down into their day-to-day expenses and found savings may be able to return to profitability sooner on lower turnover as long as they can maintain strong expense controls.
However, for many, a working capital facility became one of the most nimble and financially beneficial approaches. It was able to assist with cashflow – including covering wages, rent and consumables. And perhaps now, more than ever, there exists a need to have access to funds for a rainy day.
A line of credit enables that. Instead of borrowing money to purchase an asset, you borrow money to have readily available cash. This can be used for paying the day-to-day expenses of running a practice, and you don’t need to use your home as security to borrow the funds.
Our government responded quickly with incentives and stimulus packages that are constantly evolving. With the End of Financial Year just around the corner, consider looking at the Stimulus incentives for this financial year to mitigate tax and consult with your accountant.
For instance, you may consider purchasing equipment or goods that are available under the $150,000 instant asset write-off, making additional super contributions or pre-paying your loans.
We are seeing many take the opportunity to upgrade equipment, or freshen up their facilities. These owners are confident these changes will serve them well when their practices are once again at pre COVID-19 patient levels , and enables them to make the most of the gaps and down time.
Re-instate deferred loans
The announcement for lenders to defer repayments for 6 months made headlines everywhere. It was unclear what would and would not be considered hardship.
Whilst many of our client conversations opened with a request to defer, we helped many clients avoid it. But for some, it was the only option. If you deferred your loans, consider if practice cashflows now allow you to make your repayments in full or in part. This may end up saving you significant interest over the life of the loan.
Spending to survive
The world has virtually come to a stand-still. Plans you have had in place may have been impacted. Taking the time to review your personal and business plans for the next 3, 6, 9, 12 months is one of the most critical things you can do to plan for the remainder of this year and moving into the next.
It may be daunting, but looking out for post COVID-19 opportunities, may also give you the foot back in the door that you need – and that may involve spending money. For example, recruiting staff that have recently become available, identifying practices around you that haven’t been able to re-open that may have an active patient base or seeking alternative ways of doings things.
The last few weeks have involved many client conversations in which we’ve heard how stretched you feel and the overall state of panic. We want to focus on your recovery plan and how your business will survive and surpass this.
To speak with a finance specialist at Credabl about your personal and professional financial circumstances, reach out to the team anytime via live chat online or call 1300 27 33 22.