MEDIA RELEASE

Some of the popular end of financial year measures businesses undertake could be risky unless SMEs put in place measures to secure adequate cashflow, ScotPac CEO Jon Sutton has warned.

Mr Sutton said measures such as the temporary full expensing extension are there for SMEs’ benefit, but taking advantage of such measures requires good cashflow.

“It’s no good using the instant asset write-off measures to buy a piece of equipment if making that purchase puts a severe dent in your cashflow,” Mr Sutton said.

“Embedding cashflow forecasting into the business and securing funding that ensures good cashflow will help SMEs navigate any risks around their EOFY and new financial year initiatives.

“Putting in place a flexible capital structure, offered by funding options such as invoice finance, means a business can act when opportunities arise.

Tips for EOFY

ScotPac has the following tips for SMEs as the financial year comes to a close:

Tip 1 – Understand the exact cash needs of your business. Having a clear idea of how much cash you need to maintain your business-as-usual activities allows you to:

a. Identify if you have excess cash which may be better invested or even used to take advantage of available incentives such as the instant asset write off; or
b. Identify if there’s a shortfall which will impact your ability to meet obligations as they fall due – this is particularly important when considering outstanding ATO liabilities

Tip 2 – Think about what fixed assets, if any, your business needs now and into the future. Providing you meet the eligibility criteria, your business should be entitled to an immediate tax deduction for the cost of the asset. Remember for this to hit your FY21 tax position, the asset must be installed and ready for use BEFORE 30 June.

Tip 3 – if you haven’t already done so, book in with you advisor and chat through your business ambitions for the next 12 months. Partnering with a trusted advisor now will help give you the best chance to position your business for success in FY2022.

Getting on the front foot with ATO

Mr Sutton had a word of caution for businesses who had relied on the ATO’s lenience over the past 12 months with COVID-19, by not keeping up to date with lodgements or not making their BAS payments.
“The ATO has been very lenient during the pandemic, allowing the small business sector a lot of leeway and time to recover,” Mr Sutton said.

“As we move into a post-COVID environment and many businesses return to growth, those with outstanding lodgements or payments need to get on the front foot with the ATO,” he said.

Pro-actively approaching the ATO and working out a payment scheme is much more advisable than simply putting your head in the sand about ATO debts and waiting for them to approach you.

“It all comes back to careful cashflow management – if you have imminent ATO debts, work out how much realistically you can afford to pay and have an open dialogue with them about repayments,” Mr Sutton said.

“Using Invoice Finance funding can work well in these situations – this brings forward payment of your invoices so you have cash in hand. You get 80% of your invoices paid straight away, and the remainder later.

“Now is a great time to assess whether your business could benefit from a self-liquidating revolving line of credit facility, rather than further exposing yourself by taking on more loan repayments,” he said.

ScotPac is Australia and New Zealand’s largest non-bank business lender, providing funding to small, medium and large businesses from start-ups to enterprises exceeding $1 billion revenues. For more than 30 years ScotPac has helped thousands of business owners succeed, by unlocking the value from their business assets. Whether it is purchasing stock, investing in vehicles and equipment, improving cashflow or accessing additional working capital, ScotPac can help.

For more information contact:
Kathryn Britt
Director, Cicero Communications
kathryn@cicero.net.au
0414 661 616