It was interesting to note unpaid taxes increased by 35% between 2010 to 2014. The ATO would rival the top 4 banks as lenders to small business. The ATO are stepping up their focus on debt recovery as evidenced by the increase in winding-up applications to the Federal Courts of Australia. They are also issuing garnishee notices and Directors penalty notices to pressure business to pay their debts. As Accountants we are spending more and more time liaising with the ATO, negotiating repayment plans and trying to protect clients from further escalation of the recovery process.
In the current climate, business owners need to carefully manage their cash flow, particularly in the tough times ahead. Some useful tips:
Understand your business and the monthly ebbs and flows of your cash flow, set the simplest of Cash flow budgets.
- Plan ahead for your GST/PAYG obligations on your payment schedule.
- Review cash flow cycle from orders/jobs to completion/invoicing and collection to improve turnaround – there is always room for improvement.
- Understand your own borrowing capacity and security positon with your bank, have a fall-back position for quieter months
- Treat seriously ATO debt collection attempts.
- Your debt collector is vital to your business. Ensure they have the skills and resources necessary.
