Business Insurance covers all types of insurance such as Plant and Machinery, Commercial Vehicles, Assets and the list goes on. There are also risks in your business that you may have overlooked, and that is your cash flow, key people, and the business expenses that you need to pay. There are the risks you don’t see (except for your key people!). You can see your business assets when you get to work, you can see your building, but you cannot see your business expenses unless you are looking at your financial reports. The point here is that there are risks not so “in your face” that could cause your business to fail.
Let’s take a look at an example of how your business would be affected if the owner could not work and he is a sole trader, for this example, we will call him Bruce, and he is a 50-year-old car mechanic. He is Bruce almighty but pretty close because he does everything. He finds the clients, does the work, sends the invoices, collects payments, does the banking, G.S.T., and the list goes on.
Money is not everything, but it is certainly up there with oxygen when it comes to cash flow in a business. You can all the best gear, building, cars etc. but cashflow is the lifeblood of the business and all that goes out the window when the cash flow stops. Surprisingly, even the bank does not like it when that stops.
Back to Bruce
Bruce loves mountain biking, and it is his weekly way of getting time out from his 70-hour workweek. But Bruce is not as young as he was. Bruce finds himself in a ditch, with his bike on top of him and a broken leg. Fortunately, he gets A.C.C., and they pay him his lost income because it was an accident.
What About His Business Expenses?
What about Bruces’ business? Who is going to pay the expenses, such as the car lease, rent on the building and other fixed expenses.
Your Business Insurance should also make provision for your business cash flow if you cannot work. It can pay for your leases, pay interest on loans, phone, power and a range of other expenses that you will still need to pay regardless of whether you are working or not and whether you get anything from A.C.C. or not. Proper Business Insurance can pay your monthly expenses, whether you are unable to work due to accident or sickness. Of course, Bruces’ situation would be much worse if he stopped working due to illness because there would be no accident payment from A.C.C.
Let’s talk about your business and how we can protect your cash flow when you need it most.