By Cain Watters & Associates, Registered Investment Advisor // Guest Column
As the country continues to address the implications of COVID-19, we know many of you are uneasy about the coming weeks and months for both your family and businesses.
Elective closures continue and it is undetermined whether mandated closures will be enacted. For example, Ohio is requiring rescheduling or postponing elective procedures and Virginia is recommending practices close for two weeks, while some areas are currently seeing limited to no disruption.
With the landscape changing in varying degrees by geographic region, we wanted to offer our recommendations around cash flow and staffing, as well as additional resources available to the CWA community.
Based on your personal situation, access to cash flow and level of risk tolerance—the ideas offered below are simply suggestions to keep in your toolbox over the coming weeks and months, should you need them.
MANAGING CASH FLOW
Managing cash flow will be essential to get your practices through this time. Here are some ideas to maintain or increase your cash flow should you need it:
- Discontinue payroll for the doctor, spouse and any children. Instead, take only required draws (shareholder distributions) from the business for cash at home. This will minimize payroll taxes, federal taxes and 401(k) deferrals through this volatile time. These can all be made up in the future when cash flow resumes.
- Reevaluate dental and office supply purchases, and consider stopping purchases with exception for those products that will get you through the coming weeks.
- Call your bank and request interest-only payments on your practice and/or building loans for a period of 1-3 months. Additionally, if you are making excess payments (above the minimum required payments) on any personal or business loan, adjust this until normal cash flow
- If needed and available, access available lines of credit on the business or personal residence. If you do not have a line of credit, contact your bank to see if an emergency line of credit could be available.
- Contact your credit card companies. Because of your history with these companies, you can request to skip a payment with no penalties or interest. Additionally, many of your cards may have low interest cash advance options that could be used if needed.
- Pause any automatic funding to Defined Benefit and 401(k) plans.
- If your plan is at T Bank, we are working with the trust department to streamline this process.
- If your account is at TD Ameritrade, you can call 800-431-3500 to stop or decrease automatic contributions.
- Consider taking withdrawals from personal investment accounts (non tax-advantaged). If your personal account is at T Bank, liquidations occur on Friday and T Bank does need notice. As such, do not delay if you want to take a distribution soon.
- Consider loan options on your 401(k). Loan provisions may allow you to take up to $50,000 for both the doctor and the spouse. Note: If your plan does not allow for loan provisions, this can take some time to get done. CWA is currently working with Peeples and Kohler and The Nolan Company to see how we can speed up this process.
- Minimize personal expenses. Now may be a good time to sit down with the whole family and discuss how you can minimize spending in the coming weeks.
STAFFING & THE RELIEF PACKAGE BILL
While staff costs are the largest single expense in your business, it is also the hardest to reduce, especially during hard times. We all care for our staff, but also must manage the business. The Relief Package Bill 363-40, passed by the House on March 14, is supported by the President and is expected to pass the Senate.
There are four main areas affecting employers:
- Emergency paid sick days: The bill would give workers 14 days of paid sick leave available immediately. It ensures sick leave to those impacted by quarantine orders, or those who must stay home to care for their children. The bill reimburses small businesses through a payroll tax credit (those with 500 or fewer employees) for the cost of the 14 additional days of leave.
- Emergency paid leave: The bill would create a new federal emergency paid leave program for those unable to work because they have COVID-19, are quarantined, are caring for someone with the disease, or are caring for a child due to coronavirus-related school closings. Eligible workers would receive benefits for a month (the program goes up to three months), and the benefit amount would be two-thirds of the individual’s average monthly earnings. Those receiving pay or unemployment compensation directly through their employers aren’t eligible.
- Small Business Exemption: Under the current bill, there is an exemption for the above requirements for businesses under 50 employees.
- Expanded unemployment insurance: The bill would direct $2 billion to state unemployment insurance programs and waive measures like work search requirements or waiting weeks to those either diagnosed with COVID-19, or those who have lost their jobs due to the spread of the virus.
Should the Senate vote to approve, we will know more. As we get concrete info on the bill, we will communicate further as to how this affects your business and more recommendations on how to move forward.
We are lucky to work with fantastic vendors that are also here to help. Here are a few available resources you should find helpful:
March 19, 7:30 CST. Sponsored by Seattle Study Club. While general healthcare guidelines are available, Dr. Leslie Fang has modified these guidelines specifically for the dental profession. Don’t miss this live webinar, which will not be recorded.
On-demand, available now. CEDR‘s experts in employee law answer some of the most common questions, from people coming back from travel, sending a sick person home, employees who want to stay home, to getting sick notes from doctors.
FACEBOOK GROUP: Join the CEDR HR Basecamp Facebook group for ongoing information, updates and to ask the experts questions. Only for dentists and medical, it is a free private group which you will need to apply to.
We hope this information is helpful to you should you need it. We will continue to communicate our thoughts, recommendations and resources as they become available. Please visit our COVID-19 Resources Page for transcripts of prior communications and additional resources as they come available.
If you have specific questions, please reach out directly to your planning team.
You don’t have to navigate this alone, our advisors are here to help. REACH OUT
About the Blogger
Cain Watters is a Registered Investment Advisor. Cain Watters only conducts business in states where it is properly registered or is excluded from registration requirements. Registration is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. Request Form ADV Part 2A for a complete description of Cain Watters investment advisory services. Diversification does not ensure a profit and may not protect against loss in declining markets. Past performance is not an indicator of future results.