The nightmare before Christmas for many SMEs is the thought of how they’ll pay their BAS at the end of February. The lead-up to Christmas can be incredibly busy, then things go quiet for up to two months – and while no invoices are being paid in the meantime there are wages, suppliers and other bills that must be honoured. Then, after a period of leaner cashflow, a BAS payment is due.
We traditionally see a spike in enquiries in November as business owners look at the books and realise they will need assistance as the post-Christmas quarter can be a challenging time, and the traditional seasonal dip in cashflow makes it more difficult to fund growth and to meet outstanding liabilities on time.
With the ATO’s 2015-16 annual report showing small businesses owed almost $13.9 billion in collectible tax debt, we encourage SMEs to avoid running up a tax debt due to Christmas working-capital issues.
It’s not uncommon for high-growth-businesses to end up with an ATO debt because they don’t have the funding or cashflow support. Often this comes from a lack of awareness of the many small-business funding options available, including debtor finance, that don’t require property as security.
Here are our six tips to boost post-Christmas cashflow.
You can remove the reliance on real estate security by taking out facilities such as debtor and trade finance. With debtor finance, instead of the business owner taking on additional debt the funder offers an advance on money that is already owed to the business.
Trade finance is a working capital tool available to importers – it provides capital to bridge the gap between paying your overseas suppliers upfront and getting paid months later by your customers.
Wayne Smith, Head of Debtor Finance, Scottish Pacific