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Articles by Salesh Chand

Salesh Chand

Strategies for 2020

As we begin to emerge from lockdown into an environment that is markedly changed due to the effects of Covid-19, I’ve been thinking about what business owners and property investors can do to get through the challenging times that are no doubt ahead of us. 

Get your accounts done ASAP

At time of writing, the banks are not approving any business loans without reviewing the business’ 2020 accounts. They won’t rely on 2019 accounts, so if you want a business loan, you will need to be organised. Although the banks have money to lend, they are being very cautious about granting loans without up-to-date information. 

Currently we are getting clients asking for work to be done urgently because the banks are holding on to funds until they see the 2020 accounts. So get your records in to your accountant so they can prepare your accounts as soon as possible. 

Get your finance in place 

It is very important to arrange your overdraft facilities, credit cards etc. while you can. For more information about this, refer to my previous blogs – Impact of bank capital requirements and Finance challenges for property investors.

I strongly believe the banking environment will change rapidly and it will become impossible to get an overdraft facility.  For businesses/clients who have these facilities in place already, you should hold on to the facilities and protect your position – do not cancel these facilities.  

Plan 12 months ahead  

Cash is king, so make sure you have cash in the bank or in your balance sheet. Below are four ways you can reduce expenses and manage your cash flow. 

1.  Payment plans with IRD 

One way to build up cash is to put your GST, PAYE and provisional tax on payment plan with IRD.  IRD are offering interest-free and no penalty payment plans if your business has been hit hard by Covid-19. In some cases we are getting 6-9 months deferral for clients. 

GRA are well connected with IRD and we can help with this if you need assistance. We always encourage clients to use accountants to negotiate payment plans with the IRD, rather than trying do to it themselves. Often, negotiating directly with IRD will result in a rejection or less favourable terms than an accountant with a good relationship with IRD would be able to achieve.  

2.  Negotiate your lease

If you lease your business premises, negotiate new lease terms with your landlord – you might be able to negotiate your lease down. This will help your cash flow and your overheads.  Remember, your landlord might also be struggling, so they may be prepared reduce your rent to keep you as a tenant and maintain their income, rather than risk you having to close your business and they end up with a vacant space. 

Or they may be prepared to let you break your lease so you can find somewhere cheaper (and they can find someone who is able to pay more).

3.  Reduce unnecessary expenses

Getting rid of unnecessary expenses or reducing your current expenses can help your cash flow. For instance:

•  If your staff have work phones, look for better phone packages

•  Shop around for more cost-effective internet providers

•  Cut back on unnecessary subscriptions if don’t need them

•  Try going paperless, which will greatly reduce your stationery expenses (as well as being better for the environment)

•  Turn power off at night 

In other words, dial back as much as you can.  

4.  Reduce labour costs

If the work is not there, reduce your labour cost. One way to do this without having to reduce the number of staff you employ is to spread the work between all your employees, but reduce the hours they are all working. For example, to keep all your staff employed, everyone may need to work four days instead of five. Although their income will decrease, they are not going to lose their jobs.  

And don’t run overtime. If you don’t have work booked in advance (i.e. for more than three months), spread the available work over 40 hours, not 60. Otherwise you will be forced to make people redundant. 

You could also consider getting rid of unproductive staff, i.e. people who have been given the chance to improve many times but who haven’t. These employees may need to be made redundant. Of course you must follow the appropriate process, and take advice from an employment lawyer before making anyone redundant.  

If you have to get rid of staff you should – don’t borrow against your family home or take out a private loan to keep them employed because eventually you will run out of funds. 


These are difficult times, but don’t bury your head in the sand and ignore issues. Prepare in advance, and you have your best chance of making it through. 

If you need help, ask for it. GRA are well connected with IRD and banks – we have built mutual respect over the years, so we are in a good position to be able to assist. If you need help, please contact us: +64 9 522 7955, [email protected] or fill in our online form

Salesh Chand
Salesh Chand
Partner/Business Advisory Director
© Gilligan Rowe & Associates LP

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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.

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