The Australian Government’s job-keeper stimulus that was designed to support small to medium enterprises (SME) and not-for-profit organisations affected by the Coronavirus pandemic is due to come to an end on 28 March 2021.  In addition, the State Government’s Lotterywest relief funding for community groups impacted by COVID-19 ended on 15 March 2021.

For some businesses, clubs and associations, the government stimulus payments have been critical in supporting the underlying viability of operations. Now that these temporary relief measures are coming to an end, we suggest that it is the appropriate time for clubs and associations to plan for the future by preparing and compiling the following key information:

• cashflow forecast for the next 12 months;
• summary of the historical financial performance;
• statement of financial position;
• business evaluation; and
• business decision tree.

This information is critical for evaluating and understanding how your club has been performing to date and to assist with identifying whether the club may experience any financial difficulties in the future.

Cashflow Forecast

A cashflow forecast is an important tool for any club. A cash flow forecast is an estimate of the amount of money expected to flow in and out of your club and ideally should be prepared on best case, worst case, and likely case scenarios. It will assist with identifying any cashflow shortages which is valuable information for your club to make informed decisions and implement strategies to deal with any shortfalls.

Summary of Historical Financial Performance

A summary of historical financial performance is an analysis of the past operating income and expenses that is useful for tracking the operational performance of the club and identifying whether there are any trends or areas for improvement.

Statement of Financial Position

A statement of the financial position also known as a balance sheet represents the assets, liabilities and equity of a club or business at a point in time. The information in the statement of financial position can be used for a number of financial analyses to ascertain the financial health of the club.

Business Evaluation

The cashflow forecast, summary of the financial performance and statement of position can be used to perform a business evaluation.  We offer the following:

• Examination of the current financial position of the club;
• Identification of the root causes of the club’s problems;
• Assessment of the viability of the club;
• Identification and commentary on the alternatives available to the club to deal with its difficulties; and
• Recommendation of an appropriate course of action.

Following a review of the financial position of the club the board will need to decide whether the club can continue to trade profitably in the future or whether action is required to be taken.

Business Decision Tree

A business decision tree works by steering you towards either:

• identifying and fixing the club’s problems, thus saving the club from failure; or
• timely and orderly sale or closure of the club in a manner which maximises the returns to all stakeholders.

If you act at the right time, you will be able to influence the outcome for the benefit of your members.  We have prepared the following flow chart to assist you with the decision-making process:

It is important that you obtain advice from a reputable qualified advisor such as an accountant, lawyer or registered liquidator. Rodgers Reidy are available to provide expert advice and discuss the options available to the board.

Our initial consultations for all clubs and association members have no charge. We have extensive experience in hospitality, entertainment, tourism, not-for-profit associations and can assist clubs and associations in business evaluations, turnaround advice, advisory, restructuring, forensic accounting and corporate insolvency.

At Rodgers Reidy, we aim to, wherever possible, rescue a club in financial difficulty by designing arrangements that will return commercial viability, will benefit all stakeholders, and which avoid the need for liquidation or bankruptcy.