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Strategies for NDIS providers facing financial challenges
What strategies could be implemented by NDIS providers facing financial challenges and/or income loss as a result of COVID? Do you have any suggestions about financial planning in light of the possibility of a second wave?
AFG’s NDIS clients are actually in a very good position despite COVID-19 – one has even been able to extend the reach of their online group programs to regional NSW for the first time – so it is possible to survive or even thrive in the circumstances. Let’s explore how…
You have a couple of opportunities in terms of income.
A first step would be to enrol for the JobKeeper subsidy – 31 May is the deadline to claim for April and May.
If you satisfy the decline in turnover test for the April-June quarter, you are eligible to claim from the beginning of the scheme. You can continue to test your eligibility and enrol at any time – the scheme runs through to the end of September 2020. JobKeeper provides $1500 per fortnight per eligible employee – that’s a substantial income support to keep the organisation afloat. You can read our guidance about it here or visit the ATO for detailed information.
Can you deliver your service differently?
The other opportunity is to consider how you can deliver your services differently. Could any of your services be delivered online or contactless? What would it take – think personal protective equipment and health testing – to be able to provide your regular services in a way that protects both clients and staff? Engage your team and your clients in imagining what could work.
Remember that you will get the second cash flow boost over July-October – it will be equivalent to the payment you received after submitting your March Business Activity Statement, and will be paid in four instalments after you submit the June BAS.
On the expense side you will need to contain your costs wherever possible – wages are an obvious place to start being typically 75%+ of a not for profit’s expenses. Perhaps you can stand down staff who are unable to work (they can still receive JobKeeper through you) and cease contractors. You can redeploy staff to other tasks or you can encourage staff to take some leave – maybe looking slightly more attractive with travel restrictions due to ease from 1 June.
If you qualify for JobKeeper then you have the right to negotiate deferral or waiver of commercial rent for your premises. You could consider reducing your cleaning service if the premises are being used less.
Go through your budget
We encourage you to go through your budget and your current financials to identify items that can be eliminated, reduced or deferred. Understanding your fixed, variable, direct and indirect costs will be important so you can nimbly adjust to changing scenarios. Depending on what your reimagined service delivery looks like, you may need to consider additional costs such as PPE or IT subscriptions such as Zoom.
As to the future – we agree that planning is really difficult right now.
Given the uncertainty, we think it is especially important to approach your budget planning with some strategic thinking – don’t just start with the numbers, really give some thought to how you think your service can respond in various situations – easing restrictions, second wave, continued restrictions.
Then apply that thinking to your budget and prepare a few versions – start with what you feel is most likely and make sure you identify your fixed and variable costs. Then iterate that budget for the alternate scenarios. Make sure you note your assumptions! You’ll be pleased you did when you look back at it 6-12 months and try to remember what you were thinking mid-pandemic.
Accounting For Good is a partner on Western Sydney Community Forum’s expert panel to support community sector agencies during COVID-19.
Find out more about not for profit accounting. Read more not for profit accounting articles.
