There is currency in certainty

GoFi8ure executive director Lisa Martin shares her reflections on New Zealand’s post-Covid business landscape – including the lockdown lessons and priorities for moving forward.

When NZBusiness caught up with Lisa Martin in early June, New Zealand had just moved to Level 1 – a ‘new normal’ for the nation’s business owners. 

Unless you were one of those businesses deemed ‘essential’ over all four alert levels, Covid-19 will have left an enduring mark on your business. 

Now is the time to regroup and rebuild – but it’s going to take a degree of certainty.

Martin believes a successful transition forward revolves around certainties because ‘there is currency in certainty’.

The word currency is appropriate because, as she explains, when you seek professional liability insurance for a consulting firm, the annual certificate that says you’re covered for a set period is called a ‘certificate of currency’.

Martin recalls the lockdown days and how her team, like the vast majority of their clients, stayed in touch via Zoom. “We talked a lot about how the lockdown was affecting us as business owners, and our clients as business owners. We all craved certainty, and there is a ‘currency’ that people will pay for certainty, or they’ll pay for our services in order to achieve certainty. 

“The tagline “there’s currency in certainty” just caught on,” she says. 

“Certainty is what everybody so desperately wants.”

The most important certainty business owners are looking for post-Covid is money – money from workflow and contracts, from loyal clients; money to pay bills, to cover liabilities, payroll, taxes and debts. The memory of facing that four-week lockdown with insufficient reserves will still be fresh in people’s minds.

Certainty around cashflow is another must for business owners, Martin reminds us – and again, planning is vital. “The question is, how can I ensure that going forward, cash will continue to come in, and have I enough to get through?

“You can start scratching up some numbers, but the reality is, you need real data and someone who can interpret that data. Someone like an accountant or tax agent.

“It’s called business continuity planning, which was once a bit of a buzzword,” says Martin. 

“But again, if you want certainty, you must plan for it.”

Certainty in technology

Business certainty also comes through deploying the right technology. With the Covid lockdown happening at the end of the financial year, businesses that had access to real-time tools had an advantage – tools such as cloud-based accounting software linked to automated bank feeds which enabled the everyday measurement of income and expenditure; and cloud payroll software that produced the necessary data to apply for the wage subsidy and accurately calculate payroll, rather than doing it manually.

“If you had a resilient and agile business model, got your team set-up from home and continued to generate revenue, albeit at a reduced capacity – then you survived, and you were able to at least cover people’s salaries.”

It’s time to get off risky desktop software, warns Martin. When people couldn’t physically go into their office to process their desktop-based payroll, cloud-based technology was the great enabler, and is now the great mobiliser in the new normal.

Certainty in planning

In this ‘new normal’ the focus – particularly for businesses that struggled the most under lockdown – should be on planning, and the sooner the better, says Martin.

“There’s a saying that goes – ‘the longer you leave collecting a debt, the harder it is’. This also applies to planning your business’s future now all the disruption is behind us.”

She says the pandemic has highlighted the fact that the banks will assist businesses in need if they have an up-to-date set of financial statements and tax returns.

“Because many of our clients had all the necessary data sitting in their cloud accounting software, we were able to collate and deliver the required financial statements and tax returns in May, just one month after balance date, allowing them to go to their banks and access the appropriate loans.”

Another issue that required sorting for clients was accounting for the government wage subsidy.

Do business owners realise that the subsidy is taxable in 2021, for example?

“To claim on any subsidy it’s vital that you have access to the right data and work through an advisor,” says Martin.

She says there were business owners who successfully applied for the subsidy and then deposited those funds in their personal account. Come tax return time in 2021, the money will need to be accounted for because it is taxable.

“It highlighted to me that some people just don’t realise that their business is a separate legal entity. When they apply for things, they just tick boxes and don’t read the T’s and C’s.” 

In the same way, some business owners ignore their obligations to collect, input, file and pay GST, she says. “Ignorance is no defence with Inland Revenue. There are those who minimise their attitude towards being a good tax-paying citizen. I think Covid and the lockdown brought out the best in many people, but unfortunately it also brought out the worst in others.”

Certainty in partnerships

The pandemic highlighted the need for certainty around money, but with so many schemes and subsidies and misinformation “flying around” it also highlighted the importance of partnering with experts to make sense of it all, says Martin.

“There were so many horror stories mainly due to poor management and a lack of research.” 

She cites the example of employers simply paying out the $585.80 gross subsidy, less allowances, without staff consultation. “It shows that there are still owners who don’t care much for their staff and see their business simply as income generation.

“But thankfully the majority truly value their business and their staff, and will continue to do so.”

Martin hopes that business owners used lockdown time to quickly get the required information to their accountant or bookkeeper in order to produce financial statements and tax returns for March 31st 2020. So they know exactly where they sit from a tax perspective and whether they’ll need to negotiate a loan to get through.

“Don’t see your accountant as an expense, see them as an absolute value-add for getting those cashflow loans, and getting a stakeholder document out so you know exactly where you’re at tax-wise.”

Her advice is to sit down with your accountant now to discuss the past year and the way forward. If tough measures are required it’s better to talk to your advisor sooner rather than later.

“And if you’re not getting any response from your accountant, then you need to find a new one!”