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RPA | How to navigate your way financially through COVID 19

Supplied By • Real People Assurance |


While the COVID-19 viral pandemic continues to grow, South African citizens and SMMEs in lockdown are feeling the impacts of economic strain, and the psychological distress that accompanies it. This new experience of ‘staying home’ indefinitely has become our reality and although aims to combat the spread of the corona virus, it remains unclear what the financial implications for many individuals and SMMEs will be in the near and distant future. At the most basic level, lockdown has created fear and anxiety among people. Studies show that 95% of respondents expressed worry about the ongoing impacts of COVID-19. For most of us, the challenges of lockdown have had more than just a physical or mental impact, but also a significant blow to our financial situations.

Some of the drivers behind this financial fear include: the loss of salaries, which elicits a fear of need for basic provisions such as food; the stress of debit orders for monthly expenses like rent, insurance and so on; and the fear of the unknown financial outlook, especially in the case of workers and businesses who are considered ‘non-essential’ during lockdown. Many families in South Africa already find themselves supporting their children as well as caring for their elderly parents or relatives, making this time tougher.

These are also particularly challenging times for small and medium businesses who have limited cash reserves and rely on a steady income to keep their doors open. And what about the jobs that SMMEs created? The ripple down effect continues to etch away at our economy, cutting deeper than anticipated. What’s next? We have put together some focus points to assist in dealing with the implications of lockdown on you and your business and hopefully guide you through these trying times:

Start by doing an honest assessment of your pre-crisis financial track record. This can be re-evaluating you monthly expenses like food, utility bills and debit orders or business-related such as revenue, profit, cash flow etc. Take a reality check and ask yourself if you or your business is already in financial distress. Although a tough reality to face, it’s an important starting point as it forces you to take action.

Assess the likely duration of each pandemic phase and its possible impacts on your current situation. If you are forced to stay at home, consider how you can manage things like food consumption, and data, water and electricity usage in the household. With everyone at home, there is bound to be a spike in these expenses. In terms of your business, consider situations of supply problems, staffing availability and sales statistics. Creating a scenario analysis on the potential effect on sales, gross margin, working capital etc. will help you predict possible impacts and both short- and longer-term outcomes.

Once you have set clear priorities and objectives for your household or business, identify realistic tactics and action plans to achieve these. You could draw up a family budget for the month, set schedules on usage of certain activities like watching TV or using Data and prioritise the most important costs first while exploring payment holiday options with service providers. In terms of your business, these can be plans to develop new operational and financial strategies or how you will go forward with capital and staff management.

In these times of crisis, it is important to know your financial relief options. The Temporary Employer Relief Scheme (TERS) has been put in place to assist employers in financial distress and to aid providing wage benefits to employees. Several funding schemes have also been set up to assist SMMEs and alleviate the impact of lockdown on businesses. Some of these include the Debt relief fund, the Business Growth/Resilience Facility, the Solidarity Fund and the UIF Subsidy.

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The impact of lockdown has left South Africans feeling uncertain and stressed about the future, but it is important to remember that we are in this together.

Now, more than ever, we need to be kind to each other and maintain our notorious fighting spirit.