Cash flow basics to tackle tax debt

Written on the 1 February 2011

JUNE 2010

AN SME financier has called for a renewed focus on cash management, as payment terms fell short in the March quarter and around 80,000 Australian businesses now have downgraded risk profiles.

Scottish Pacific Benchmark Queensland state manager Wayne Smith, says businesses need to believe they can collect invoices, despite increasing delays for bill payments.

“It is now taking businesses a week longer than it was in mid-2009 to pay their bills – for a business that turns over $5 million and has been accustomed to collecting invoices in 45 days, this takes circa $100,000 out of their working capital,” he says.

“It is still possible to collect invoices in a timely manner and we have seen this in our own business with our clients’ collective debt turn holding firm at around 45 days.

“Check that customers have received invoices and that they are correct, ask them to confirm payment dates in advance, chase within a couple of days of the due date and follow up quickly on promises to pay which don’t materialise.”

Smith says the level of tax debt in small businesses has grown considerably as cash flow remains the biggest burden on SME growth.

“Payment terms have deteriorated and ATO arrears have become a significant issue as traditional sources of credit have tightened up on the back of the GFC,” he says.

“As an organisation that specialises in funding growth in the small businesses sector, our current take is that many are not yet feeling confident enough to invest in the future,” he says.


Latest News

ASF UNVEILS TRAFFIC PLANS FOR THE SPIT

A SECOND bridge over the Nerang River is the centrepiece of the ASF Consortium's plan to improve traffic flow ...

BHP AND VALE EDGE CLOSER TO $47.5 BILLION SAMARCO DAM DISASTER SETTLEMENT

BHP Billiton (ASX: BHP) and Brazilian mining company Vale have entered into a preliminary agreement with Brazilian fe...

BLK SPORT FOUNDER TYRON BRANT REMAINS CEO UNDER NEW OWNERS

BLK Sport has been purchased from receivers McGrathNicol by a private consortium composed of a TimorLeste-based oi...

CARSALES CEO RETIRES AS NEW COMPETITOR COX FINALISES MERGER

CARSALES will have a new CEO as it takes on a fresh challenger to its crown as the dominant online car sales portal i...

Related News

CARSALES CEO RETIRES AS NEW COMPETITOR COX FINALISES MERGER

CARSALES will have a new CEO as it takes on a fresh challenger to its crown as the dominant online car sales portal i...

BUSINESS CONFIDENCE AT A SIX-YEAR HIGH

SMALL and medium businesses have entered 2017 with their confidence at a six-year high, building on strong gains m...

CONSUMERS PESSIMISTIC ENTERING 2017

CONSUMER confidence remains at its weakest point since April 2016, according to the latest Westpac Melbourne Institut...

RISE OF STARTUP SUPPORT PROGRAMS NOT AS ROSY AT IT SEEMS

ENTREPRENEURIAL cultivation companies in Australia are appearing quickly, but questions have been raised about whe...

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter