In the previous article, we’ve shared a few important points you should know about Wage Subsidy Program 2.0 (PSU 2.0). You may read the article here. As some still have confusions about PSU 2.0, so we at WargaBiz decided to take the initiative to ask Bryan Cheong, founder Syntax Technologies Sdn Bhd and also an accounting guru.
Here’s are some common mistakes people make when applying for PSU 2.0:
1. Applying PSU 2.0 without understanding the company’s current cash flow
Bryan Cheong shared that there are many cases where people regret after applying for the wage subsidy. It is because they don’t fully understand the program and other conditions.
Employers need to understand the company’s cash flow; can they sustain for the next 6 months without taking the wage subsidy? Those businesses that are greatly affected and they are running low on the cash reserve should apply for this wage subsidy. If your business sales or revenue have dropped by 30% from 2019-2020, applying for this wage subsidy might help your business.
Furthermore, employers are forbidden from retrenching all employees once they apply. So employers should take into account whether with the RM600 subsidy, they can afford to sustain the business without terminating the staff or not.
“If the wage subsidy program might burden them for the next few months, employers can think of other options – one of it is by reviewing the salary. Many companies practice this. However, both employers and employees must negotiate and agree. Employers must submit PK Form to the nearest labour office to notify that your company is facing financial difficulties and going to negotiate or adjust the staff payroll.”
2. Fully rely the on Wage Subsidy Program
Note that the Wage Subsidy Program is just a temporary relief. In the next 3 months, if your company’s business is still not doing well, there will be a lot of soft loans available. However, you must understand that taking loan after loan will not help solve the core issue.
Thus, you must plan strategies on how to sustain the business in the future. Many entrepreneurs think that the government will give more incentives onwards, however, it just a temporary relief. ” Financial aid or loan will only help 10-20% of your business. You must think of another 80% on how to maintain your business.”
3. Companies do not pivot their businesses to stay afloat
Now is the right time to pivot your business. Pivot intends to help your business recover from a tough period or survive. You must be creative and think of ways to generate money if your existing business can’t sustain due to the pandemic. This is more practical than relying on the subsidy alone.
“An office next to me is a travel agency. As travel and tourism industry is greatly affected by the pandemic, they decided to pivot the business. What they do currently is something completely different than what they used to do. They work with other agencies to help them do marketing. This is what we call creativity. Rather than terminating all the staff, the employer thinks of something on how to get money.”
4. They don’t have the profit and loss (P&L) statement
When the government announced PSU 2.0, many companies especially SMEs have difficulties to apply. This is because they are not able to provide the P&L (profit & loss) statement. This is because they don’t have a system to help them to generate the report. Documentation is really important and any SMEs should get ready with all the important documents to make it easier to apply for any financial aids.
It is not necessary to provide the whole 2019 and 2020 profit & loss statement. For example, if you provide Sept 2019 report and Sept 2020 report, it is sufficient to do the comparison for the P&L.
“My advice is to always get updated with all the current news and join any groups in Facebook if you want to get more explanation or details regarding some issues. Surprisingly, some Facebook users share accurate and important information that you can’t get anywhere.”
5. Providing the wrong Business Registration Number (BRN)
This is one of the common mistakes people do when applying for the wage subsidy and resulting in their application gets rejected. Business Registration Number (BRN) is the company registration number provided to the bank when opening the bank account.
Employers can request the BRN directly from their banks to ensure accuracy. If calling the bank might be difficult for you, you can always get it from your cheque book. However, if you still can’t get it, it’s best to request directly from the bank.
Remember that you must download, complete, and upload the BRN Form on prihatin.perkeso.gov.my together with the application.
Here’s a list of documents you should prepare to apply for the PSU 2.0:
- Names of eligible employees (based on the size of the company)
- The employer’s bank account information (copy of first page of the bank statement)
- The Business Registration Number (BRN) used to open the company bank account (please refer to the bank to avoid confusion)
- A copy of SSM / ROS / ROB / relevant local authority registration certificate
- The PSU2.0 Declaration Form