First step, survive. Second step, thrive.

A brief guide to getting through the pandemic – economically.

The promising news is that we are back on track – perhaps not as fast as most of us would hope but nevertheless, we are on track. Much of the world is beginning to cautiously reopen its doors for business, and Australia has already started that process with a timeline that sees us reopening parts of the economy over a few stages.

The scary thought for many speculators, however, is that we don’t know exactly what we will find on the other side. Our societies will be different, although nobody knows to what extent and in what ways, and our economies will also be different. Some organisations will emerge from the COVID-19 crisis thriving – not just the obvious ones like Zoom, and other international tech companies, but also local success stories like Airwallex. But others may be facing a more uncertain future, and some are going to need support if we are to get the economy up and running on all cylinders once again.

And it is not just smaller businesses that are facing existential troubles. The airlines are the most obvious big name victims of the entire crisis, but as The Wall Street Journal recently reported, car rental company, Hertz is also preparing for potential bankruptcy while it struggles to reduce its debt payments. This news came just days after it filed legal papers admitting it “did not make certain payments” on its operating leases. Bankruptcy is likely to be a last resort: Hertz is known to be taking many other measures to protect itself from the impact the crisis has had on its business and its ability to pay all its creditors promptly. Many other businesses will need to take similar defensive measures in the months ahead, and this article is designed to help you work out which ones you might need to take.

Let’s start with the obvious – you can’t make informed decisions without the right information. You need to understand your financial situation in depth, including your ability to trade, your capacity to pay outstanding debts, and to meet existing leasing or loan repayments. Now is the time to get together with your finance team and your accountants to discuss exactly what your current situation is. Your team should also be up to date with the latest news on what Government support might be available to you. Many stimulus packages have been introduced, which include measures to support enterprise, though these do skew towards smaller businesses for obvious reasons.

If your major debts are to banks or insurers, the Government has helped to secure some concessions to support businesses like you. New loan deferral arrangements have been introduced, which you can discuss with experts trained for this purpose within each bank (a full list of contacts can be found at the Australian Banking Association’s website). The Australian Competition & Consumer Commission (ACCC) has also secured a deal with insurance companies and brokers to offer payment deferrals and even refunds to businesses directly impacted by the current crisis.

This may also be the one time when the Australian Taxation Office (ATO) becomes your new best friend. If your business is struggling because of COVID-19, the ATO may be able to grant you deferrals to help you weather the storm. However, this is certainly an area where you will need expert advice, as deferring on taxes may have a knock-on effect on your ability to seek assistance from the stimulus packages named above. In all cases of assistance, you need to be checking the legal fine print carefully, as none of this support comes entirely without strings attached.

Working with the Government creates its own set of challenges, but discussing debts with private individuals and businesses is a whole other ball game, and an opportunity to develop your negotiation skills. Sometimes this means working out deals with customers who owe you money, understanding that they too are likely in difficult situations, and bearing in mind that if you make demands that they cannot meet and force them out of business, you may lose more in the long run. At other times, the shoe may be on the other foot, and you may need to persuade key creditors to allow deferments while your situation stabilises.

Often, your biggest creditor may be your landlord, but the Government has anticipated this and put in place some protective measures, including a moratorium on evictions over the next six months for commercial tenancies in financial distress due to COVID-19. The Government is strongly encouraging commercial tenants, landlords and financial institutions to work closely together to find a way forward, which allows all parties to survive and, eventually, thrive—which brings us back to the good news.

If one positive thing has emerged from this crisis, it is that we all—whether individuals or businesses—recognize that we are going through it together, and the only way we will emerge from it, “is together”. That’s why if you are creative, positive and proactive in your approach to managing your obligations, you will be able to get through this and see success on the other side. Those businesses who adopt the ‘ostrich strategy’ are the ones who will be left behind.