We hope that this message finds you and your family healthy and safe. The stress of this situation is undoubtedly taking a toll on everyone at this point. We hope that you are able to manage as best as possible. These times are unprecedented, and although there is no guidebook, we hope that your relationship with Paladini Financial has provided some level of peace and direction through the storm.
We have had many conversations and communications in recent days. We would like to summarize some of those points here, in hopes to bring a bit more clarity in a very confusing time.
Office closures will undoubtedly be a huge strain on both personal and office cash flow. We suggest the following while your office is closed or working at a reduced pace.
- Cease payroll for yourself and family members. If cash flow is needed to pay bills at home, take distributions from your business account but do not run those through payroll.
- Seek deferrals of loans payments from any lenders. Most practice financiers are offering deferral of payments for up to 90 days. Take advantage of any deferrals granted. Ask for deferral of payments on auto loans, and mortgages as well. We have not seen as much leeway with mortgage providers, but it never hurts to ask.
- Call your credit card companies. Many credit card companies are waiving interest or penalties on credit cards. Take advantage of this if granted.
- Call your bank to set up a line of credit. Lines of credit on your practice or home can be obtained and can provide a great deal of flexibility when cash flow is tight.
- Call your landlord. If you are being granted loan deferrals, your landlord may be receiving the same. Ask that lease payments be delayed until after you are able to re-open.
- Delay retirement contributions. As much as it pains us to miss out on making contributions while the market is low, your cash flow should be the number one concern right now. Delay retirement plan contributions until after you have re-opened and cash flow has normalized.
- Call your student loan servicer. We have been made aware that federal student loans are suspending payments for 60 days
- Call your life and disability companies. Insurance companies are considering options to accommodate premium deferment on monthly premiums during this time.
- Do not pay any 2019 tax due at filing. The IRS has released that all penalty and interest due for 2019 tax due at filing will be waived. We believe that all states have followed in line. Do not pay any of the tax due at this point in time.
- Reduce spending. Both in the office and personally. Be selective about which bills to pay and purchases to make. Preservation of cash flow is of utmost importance when you don’t know how long the closures will last.
The main question we are facing from clients today is how you can best take care of your employees, follow federal and state guidelines, and preserve your ability to re-open all at the same time. Federal and state guidelines are continuing to evolve as I type this message to you. The US senate is formulating Phase III of the Coronavirus Relief package and we hope to see its passage this weekend. With it, we hope to have much more clarity on how employees should be treated and paid while you are closed or working a reduced schedule, but until then, our advice is as follows:
- If you choose to keep on a limited staff, utilize employees to work to work on insurance filings, get up to date on training, reschedule patients, etc. as needed. We suggest you work on submitting all outstanding claims as soon as possible.
- Employees should be allowed to use accrued sick or vacation time while the office is closed or should be paid out accrued sick or vacation time if terminated completely.
- Our interpretation at this time, is that the requirement to pay 14 days sick leave to eligible employees (Sick, caring for sick, quarantined, caring for children) should only be applied to businesses who are able to continue operations. Since dentists are being forced to closed, we are not recommending that you pay this 14 day sick leave at this time. We believe you will be exempted from this requirement. We should receive more clarification on this soon. Some of our clients are electing to pay this amount despite not being forced to. If you choose to do so, that would be at your discretion.
- Advise employees whose hours have been reduced or whose hours have been eliminated that they can file for unemployment.
- You can continue to pay employees for work performed even if they are on unemployment. In most cases the amount paid to them in wages will be greater than the amounts lost in unemployment benefits.
We are here to answer your questions, provide guidance, and to stand beside you as we all move forward.