6 Things All SMEs Should Be Doing to Deal With the Fallout of the COVID-19 Virus


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DATE PUBLISHED: March 30, 2020

Much has been written about the various stimulus packages and administrative relief afforded by Governments that are trying to stem the pain SMEs are experiencing. Much has also been written about the legal issues of frustration of contract, delay events, force majeure provisions in contracts etc.

This article will not do either, because what we are seeing and hearing is that many of our SME clients and adviser referral partners need is practical advice to help them to make decisions now.

Below we share with you the 6 practical things that we think that all SMEs should be doing in response to the impact COVID-19 is having on their businesses and workforce.


If you haven’t already, stop reading and talk to your bank.

The major banks have evidenced a willingness to work with customers to assist them through this economic crisis, offering a variety of relief from extension of loan terms, repayment free periods and interest free periods to get them through.

Also, in our experience, the bank is less likely to move adversely against the customer that is talking to them than the customer that stops returning calls.

Even if clients are not fitting within published “hardship” criteria, we are seeing that conversations and negotiations of assistance are still occurring.


Understand what makes your business tick and understand how COVID-19 will impact that.

Do some modelling with your accountant so you can plan your cash flows over the next 3, 6, 9 and 12 months and have a plan in place to succeed. Your plan should be fluid as unfortunately none of us have a crystal ball.

Your accountant will also be a great resource to rely upon for access to the various stimulus packages and administrative relief afforded by Governments that are trying to stem the pain SMEs are experiencing in dealing with COVID-19.

But our two cents on what is on offer:

  • tax free cash is king, so talk to your accountant about what you need to do (if anything) to receive the up to $100,000 back over the next 6 months of your PAYG instalments back or for those Queensland businesses subject to payroll tax, whether you can receive a refund of your payroll tax for 2 months ;
  • beware taking up the debt packages offered to pay wages, creditors etc. as this will need to be paid back at a point in the future. Make sure you run your worst case cash flow projections with your accountant before taking on government guaranteed low interest debt;
  • before you take up the administrative relief offered by the ATO for lodgement and payments, be sure to talk to your accountant and/or lawyer about your capacity to pay that amount in the future, as the tax “director penalty notice” regime may bring home liability to directors at a point in the future. The legislation relating to director penalty notices have not been changed! The ATO has said that it will tailor solutions for directors of businesses that are currently struggling due to the COVID-19 virus, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices, but understanding potential future exposure and capacity of your business to pay will be key.


Many SMEs and their owners are worried about how they are going to pay their rent and outgoings under their lease (and the personal guarantees that sit behind those obligations). Many landlords are worried about how they are going to pay their mortgages if their tenants do not pay their rent and outgoings (and who would fill the building if the tenant falls over).

With both you and your landlord seeking certainty about meeting your obligations under the lease, now, more than ever, your interests with your landlord are aligned, so why not contact them to discuss:

  • rental review (this may be short term or long term);
  • rental deferral;
  • rent and outgoing abatement (this would likely be short term);
  • draw down on existing security deposits with no requirement to top them up (at all or for a period).

Despite the alignment of interests with your landlord, it would be naïve to just ask your landlord for such relief, so consider what security you can give them such as:

  • entering into a forbearance arrangement;
  • personal guarantees supported by mortgages or a security interest over assets (in our experience, many personal guarantees are not supported by security);
  • increased bank guarantee (if you can get agreement from your bank).
  • etc.


The increase in the threshold ($2,000 to $20,000) and timeframes for bringing insolvency proceedings (21 days to 6 months) may mean your aged debtors may live on for longer than they would have in the pre-COVID-19 world.

Negotiating (and importantly, documenting) with your aged debtors for a forbearance and modest instalment payment arrangements may see you keep some cash coming in the door whilst securing your position in these tough times.


Where you rely on customers paying you in arrears, have you taken security for payment of goods provided or services rendered? What do your terms and conditions say? Have you taken steps to register your PPSA registrations? Do you have personal guarantees from directors of your customers?

As mentioned above, the increase in the threshold and timeframes for bringing insolvency proceedings (21 days to 6 months) may mean people will take longer to pay, so ensuring you have security will be key.

A review of your security position in respect of your largest customers (if not all of your customers) is a must at this time to ensure that you have security to be paid. This would require:

  • a review of your terms and conditions of supply;
  • a review of securities registered by you against the assets of your customers (likely on the Personal Property Securities Register);
  • a review of your debtor lists;
  • a review of signed agreements provided by your customers.

The changes to the bankruptcy and insolvency laws may allow you to act quickly and register securities and still have the benefits of the security if your customer does not survive the COVID-19 crisis (including that security interests obtained within 6 months of bankruptcy or insolvency may not be effective at law).


Make sure you are discharging all of your obligations to your employees, including:

  • discharging your duty of care to keep them safe, both at work and on their way to work;
  • if they are working from home, discharging your obligations to ensure they have a safe place to work;
  • adequately providing leave, where required.

It’s hard to think about, but if COVID-19 causes a prolonged unbudgeted impact on your business, you may need to have to make some tough decisions regarding your workforce. Options available include:

  • negotiated outcomes with your staff where they vary their employment agreements (in the short term or longer term);
  • stand downs during periods of inactivity; and
  • redundancies.

Managing your workforce in these uncertain times will be difficult as we are dealing with an issue not seen since the times of the World Wars and the Spanish Flu in 1912. But we are seeing that many employees are keen to work with their employers to see off these hard times.


  • Negotiating relief with your landlord, your bank or the ATO.
  • Advising on the application Director Penalty Notice regime.
  • Drafting forbearance deeds with your debtors and assisting you to take adequate security.
  • Reviewing your terms and conditions and registrations of securities on the PPSR or the Land Titles Office.
  • Drafting security documents such as guarantees, mortgages and general security agreements.
  • Documenting any agreement with your employees to vary the terms of their employment.
  • Managing redundancies or stand down of employees.

We are also offering free consultations with all existing and new clients to help them deal with the affects of COVID-19 on their business.

free covid-19 consultation

We are offering free consultations to all existing and new clients to help them deal with the affects of COVID-19 on their business.


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