3 Effective Ways You Can Use Your Cash Flow Boost
Amid the rise of COVID-19 and its effects on Australian businesses, the country’s government continues to introduce countermeasures to assist companies in their fight to keep the economy afloat.
Alongside the JobKeeper program, various measures, such as stimulus packages, tax reductions, and other forms of government assistance have helped countless companies get back on their feet. Lately, however, two cash flows provided by the federal government have become of invaluable help to qualifying organisations as they pose opportunities for recovery.
A persistent question you may have in mind
Although the latest cash flow boosts offered by the government yield opportunities to get operations back to normalcy, there’s one question that many companies still have in their minds: “What could my business do with a cash flow boost?”
The road to recovery: how you can use your cash flow boost best
Now that more streams of cash, refund payment, and tax credits are being introduced by the ATO’s latest support measures, you may feel the pressure to start acting accordingly. If you’ve received a significant stream of cash lately but don’t know what to do with it, here are three helpful ideas on how to use your cash flow boost:
1. You can use it to boost your eligibility for tax credits
Whether you’re a sole trader, trust, partnership, corporation, NFP, or small-medium business entity, your company is eligible for a cash flow boost if you had an Australian Business Number on 12 March 2020. Suppose you’re one of the small and medium entities or NFPs that have an aggregated annual turnover rate under $50 million. In that case, you can use your boost to increase your eligibility for tax credits if you’ve withheld tax from the following:
Salary and wages
Eligible retirement payments
Voluntary withholding (for contractors)
2. You can use it to enhance your business’s cash flow
Similar to other businesses, your company is most likely suffering from a cash flow problem because of lower footfall and supply-related constraints, which may or may not have impacted its performance. With the help of the cash flow boost, you can restart your business’s operations, move cash between accounts, handle obligations, and set the stage for its adjustment to a new normal with necessary investments.
3. You can use it to handle liabilities
Among all the different concerns that most Australian business owners have during this pandemic, settling liabilities and dues to ease the strain brought about by slowed operations is the greatest.
Seeing that more companies are disabled with nowhere to go, accumulating interest rates from prior dues may play a key role in their closure and bankruptcy if they aren’t careful. If you play it smart and use your cash flow boost carefully, you can eliminate persistent balances and accumulate interest from loans so that you can clear what’s on your plate!
Amid the difficulties posed by COVID-19 and its effect on the stability of most Australian businesses, the federal government’s two latest cash flow boosts pose opportunities to turn the tides around. If you’ve received your cash flow boost but don’t know how to use it for your company's advantage, keeping note of the three ideas mentioned above can start you off on the right foot! We're an accounting firm in the Gold Coast that specialises in various services, such as company set-ups, outsourced bookkeeping and accounting services, and Xero consultancy. Get in touch with us today to see how we can help keep your business in peak financial shape!