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Finance & insurance

NZIA Chief Executive Teena Hale Pennington outlines what practices should do to safeguard their financial wellbeing

Cash flow

Making a financial plan and reviewing it regularly will help you and your practice to navigate the uncertainty of the current environment. Two important things to think about and to focus on are – cash flow and your relationship with your bank.

Understand cash flow

Assess your cash flow requirements for the next few months. Include all known sources of income and expense commitments. Assess the likelihood of your income stream and risks related to this. Be conservative in your assessment of both. Assessing any shortfall is good financial planning in uncertain times. Talk to your business/financial advisor if you need assistance to assess your cash flow requirements.

Talk early and often with your bank

Talk to your bank and your relationship manager regarding your assessment of any cash flow pressures. Identify with the bank the options available to you to ease financial pressure immediately, several months from now and into the future. This conversation with your bank is critically important. All the banks will have a range of support options for those impacted financially by COVID-19. There will be options for both business and personal customers. It’s much easier to have these conversations earlier and to plan now. You may never need to use some of the options identified – but you will have done the thinking ahead of time.

Employers will need to demonstrate they have talked to their bank if they apply for a government wage subsidy for employees (see below).

I would urge all practices to get in touch with their accountants, financial advisers and banks to identify the options available and to plan now for different scenarios.

Insurance

Talk to your insurance broker as soon as possible. They can review your situation and provide advice based on your individual circumstances.

In many cases policy exclusions for events relating to infectious or contagious disease may apply, meaning that cover is not available.

It is important to note that property and business interruption insurance policies generally exclude all claims arising from any infectious or contagious diseases. This means that you are unable to rely on your insurance policies to cover any revenue shortfalls you may experience as a result of COVID-19. If your practice is experiencing economic difficulties you may wish to consider reviewing your insurance programme, and in particular your business interruption limits. Again, your insurance broker can review and advise based on your individual situation.

Aon’s Infectious Disease Response Task Force has established a resource site to support organisations in mounting effective infectious disease (pandemic) response, and in planning for impacts that may confront businesses, their employees, and the communities in which businesses operate and employees reside. Details can be found on the Aon website

COVID-19 financial support

The Government has introduced a COVID-19 leave payment scheme to incentivise self-isolation by employees, the self-employed and contractors. Find out more and apply on our government support page

More information on the COVID-19 Wage Subsidy is available on the Work and Income website or by calling 0800 40 80 40.

For businesses, the government is allowing write-backs of losses this year against last year’s tax paid and applicants may receive a refund of prior tax paid. Find out more on the IRD website