Many businesses in South East Queensland and Northern New South Wales have just started getting back to normal trading after the Covid-19 pandemic. However, some business are again facing are facing major disruption as a result of flooding which occurred in late February and early March 2022.
What can businesses affected by the 2022 floods do?
Claim on insurance policies and access disaster relieve payments
If you have appropriate business insurance you may be able to make a claim on your insurance policies for any damage to assets or losses caused through business interruption. You should also look into what disaster recovery payments you may be entitled to and talk to your accountant or contact us to obtain further information about eligibility.
Seek to cut ongoing costs in the short term
If your business has had to close, or has been disrupted one of the first things you should seek to do is quickly cut ongoing costs. You should obtain professional advice prior to taking any action, but ways to minimise future costs include:
- Seeking rent relief or a rent reduction from your landlord if your business premises is still useable. If the premises has been flooded or has encountered other problems, you should consult with solicitors about whether rent is payable and any other possible remedies.
- Stand down, or terminate the employment of staff. Staff costs can be a significant portion of a businesses expenses and whilst no one wants to see their staff impacted, often taking an earlier proactive approach to staffing requirements can be better in the long run for all concerns if it avoids a business failing because it runs out of available funds.
- Negotiate a payment arrangement with the ATO for any tax debts owed.
- Look at settling debts owed to creditors or entering into payment plans to provide short term cash flow and long term business viability.
Get professional advice
The best thing you can do if your business is in financial difficulty as a result of the recent floods is get professional advice. At Pearce & Heers we can assist with advising on:
- Options available other than liquidation or voluntary administration;
- Risks for directors of businesses; and
- Strategies to minimise risk and deal with debt problems.
Voluntary administration or small business restructuring
Voluntary administration or small business restructuring can sometimes be used to save a business with financial problems. These processes allow a business to “settle” their debts and continue trading. The linked articles provide further information about the processes and if you would like to see if they may be suitable for your business please get in contact with our Brisbane or Gold Coast offices.
If your business is no longer viable or it has unmanageable debts, then placing it in liquidation may be the best option. There can be benefits of placing a company in liquidation, including:
- It is an appropriate way to shut down an unprofitable business;
- It can result in certain employee entitlements being paid by the Federal Government’s Fair Entitlement Guarantee Scheme; and
- It can help avoid personal liability under a Director Penalty Notice issued by the ATO and personal liability for insolvent trading.
Contact us for assistance
Pearce & Heers is here to help with providing advice, assistance and solutions for clients experiencing difficulties. So if your business has been affected by recent flooding in South East Queensland and Northern New South Wales, please call us on 07 3221 0055 or get in contact with our Brisbane or Gold Coast offices.