Showing results for kim acscs top kim known known accesses
Securing finance can be a crucial step in the growth of small and medium sized enterprises. Whether you’re exploring more conventional business finance, tailored invoice finance solutions, trade finance to facilitate international trade or asset finance, knowing how to overcome common challenges in securing the capital you need is critical. Overcoming the Top 9 Challenges […]
Read moreSmall businesses are Australia’s economic backbone. Recent research found, more than 99% of all Australian companies are small businesses, and they contribute $380 billion AUD to the economy.
But one consistent issue these companies face is obtaining capital. Roughly a third of small businesses start with less than $7,200 AUD, and 58% start with less than $35,500.
Knowing where to turn can you help secure the capital needed for your business to flourish.
Here are some viable financing options:
One of the first avenues to explore is government funding. This isn’t necessarily an option for brand new startups, but it can potentially work if your growth is your focus.
Visit the Grants and Assistance Programs section of Business.gov.au to get started. Enter information like your postcode, industry and business objectives, and you’ll see which programs you qualify for.
Here’s an example.
Click on the specific program you’re interested in, and you’ll get an overview, eligibility criteria and learn how to apply.
For instance, one small business grant program was specifically designed for helping Melbourne-based companies grow and was offering up to $30,000.
This is perhaps the most convenient option and provides you with a line of credit for funding your small business. While business credit cards may not be the right choice if you need a large amount of funding, it can certainly help fill in the gaps.
They’re fairly easy to qualify for when compared to many other business loans and offer plenty of flexibility in terms of spending. Many offer rewards like cash back and travel points. They also give you a financial cushion so you can cover unexpected expenses as they arise.
An added plus is business credits can help build your credit score as long as you consistently make payments on time. In turn, this can help you lock in better interest rates on future business financing options.
The main drawback is that many come with high interest rates. If mismanaged, it can create a financial backlash that hurts your company. So you’ll want to thoroughly go over the details and make sure you understand the repayment terms.
This guide from Small Business Loans Australia highlights 5 of the top business credit cards to check out.
These are collateral-based loans where you put up a valuable asset such as your car or home in exchange for financing.
“What you choose to secure these business loans with, you’re essentially promising your lender that you’ll repay your loan,” says Fundera. If you aren’t able to repay your loan, the lender can use the collateralised assets or personal guarantee to legally recoup their losses.”
As a result, you need to be sure that you can repay a secured business loan in full and feel comfortable doing so.
Here are the pros:
Here are the cons:
To learn more about business loans and compare top providers, check out this resource from Finder.
Crowdfunding is a relatively new concept that’s gained a lot of traction as of late. This is where a business raises capital through “the crowd” — a group of people who support your idea and make financial contributions to your company.
This typically involves small amounts of money across a large group of people rather than just a large sum from a single investor. In exchange, backers usually receive some type of reward such as a pre-order of the product or branded merchandise.
Those seeking crowdfunding launch a campaign with a specific timeframe. If funding targets are reached by the deadline, you receive the money and backers receive their reward. Otherwise, you won’t receive the funds and backers won’t be charged. In other words, it’s all-or-nothing.
One of the main benefits of crowdfunding is that it’s low-risk. You’re not required to fulfill rewards unless your funding goal is met, and you don’t have to pay any money back like you would with business credit cards or a line of credit.
You’re also not losing any equity in the process. Backers are essentially donating to your company, so you don’t have to give up an equity stake to investors — something that can be huge if you’re successful.
On top of that, crowdfunding can give you some nice exposure. There have been instances where campaigns have went viral with brands basically becoming household names overnight. This makes it ideal if you’re a new startup looking to gain the attention of your target audience.
The downside would be that it takes time and money to create a campaign, and there’s always the risk of failure. If your campaign goal isn’t met by the deadline, you won’t have anything to show for it.
There are now hundreds of crowdfunding platforms to choose from. This list from Crowdfunding.com highlights some of the more popular ones.
“Angel investor” is a catch-all term that applies to a private investor, seed investor or anyone with a large amount of capital who’s interested in providing funding to a business, usually in exchange for capital.
Negotiations are made where both parties decide upon how big of an investment there will be and how much equity stake will be given away. Since an angel investor faces a high level of risk, they usually seek a high return on their investment — often 20 to 50% equity.
Therefore, it’s not usually a good move if you’re looking to retain most of your equity. It can, however, be viable if giving up equity justifies the growth of your business.
Going this route offers 2 main advantages. one, you can obtain a large amount of capital, with deals easily reaching six figures. This can ignite business growth and dramatically increase cash flow. You can purchase inventory, hire new employees, buy new equipment and reinvest in your company.
The other benefit is the knowledge and expertise that comes along with an angel investor. Many are entrepreneurs themselves and know what it takes to successfully grow a company. Having them in your corner means you’ve got a valuable partner with a huge incentive to help your business. You may even be able to take advantage of their contacts to open even more doors.
Check out Australia Angel Investors for a comprehensive list of over 1,400 potential investors.
Also known as debtor finance, this is a form of business financing that involves using your outstanding invoices as collateral. You simply upload the invoice you’ve sent to your client, get approval (up to 95% of the value of the invoice, often available within 24 hours) and receive a cash advancement. The remaining money becomes available once the invoice is paid in full.
If slow or late-paying clients are the primary reason for your lack of cash flow, debtor finance is an effective solution.
And many companies enjoy the flexibility that it offers. Debtor finance offers a full range of solutions to accommodate a variety of needs.
There are full service facilities where the lender assumes responsibility for collections and tracks down payments. This works well if you don’t want to be burdened by the distractions of continually following up with slow-paying clients.
There’s also an option for confidential facilities, which are ideal if you have a dedicated finance department and don’t wish to disclose the fact that you’re seeking financing to clients. Everything is still done in-house. You just receive a line of credit.
There’s also Selective Invoice Financing where you only submit invoices you want funding against. You can submit just one invoice or multiple invoices whenever you need. This tends to work well if you only need occasional financing for an injection of working capital. Operating a seasonal company or needing to replace a piece of equipment are good examples.
And unlike secured business loans, you don’t usually need to put up real estate or your vehicle with debtor finance. Your outstanding invoices are all you need.
There are a lot of possibilities for small businesses seeking financing. You can go a more traditional route like business credit cards, grants or secured loans. Or you can take a newer approach like crowdfunding, angel investing or debtor finance.
What’s important is that you find viable financing options that meet your needs and you feel comfortable with. In other words, does it offer the funding you need and have reasonable repayment terms?
Examining each of the options listed above should provide you with the information you need to point you in the right direction.
Do you have personal experience with any of these financing options? Give us a call to discuss these options further on 1300 505 883, or click here for us to get in touch.
Read moreUpdated on 27th February 2025 Recent statistics regarding small and medium sized businesses in Australia indicate significant business finance and working capital-related concerns. 87% of small businesses in the country experience cash flow issues and – perhaps more shockingly – 34% of small business owners have had to forgo their own salaries as a result. […]
Read moreTop factors to help SMEs rebound SMEs were asked to name the top three factors they think are required in order for the small business sector to rebound from the COVID-19 recession. Having open borders was the top factor, by a significant margin. Almost two-thirds of SMEs (63.8%) felt this way, and on this issue […]
Read moreSME Growth Index results indicate some business owners have already changed their business funding behaviour in response to the pandemic, and others are looking to change. As outlined in Insight 1, small businesses have flagged their intentions to work with multiple funders (increasingly non-bank lenders) and to consider changing their existing funder. One in 12 […]
Read moreThe March 2019 Scottish Pacific SME Growth Index Report made many interesting discoveries about the current state of Australian businesses. While some findings were discouraging like increased difficulty accessing funding due to property downturns and the Royal Commission, others were quite encouraging.
One in particular was the fact that revenue growth was rising — a positive sign for Australian SMEs and business owners.
In this post, we’ll take an in-depth look at this phenomenon and explain why fewer SMEs are in trouble. We’ll also discuss some common cash flow strategies business owners are using to keep up with growth, as well as some other notable trends.
Things are looking good for most business owners, with growth being forecasted for many SMEs. “More than 53% say they’ll grow in the first half of 2019, up from 51% six months ago. This is the most positive result recorded in the SME Growth Index since the first half of 2016.”
More specifically, “Growth businesses are forecasting an average 4.9% revenue rise (up from 4.5%).
This is a great sign considering the obstacles many SMEs have recently faced when it comes to obtaining financing. Despite their difficulties, many business owners are managing to keep their companies is good financial health and are moving in a positive direction.
Many experts have the sense that Australia’s more vulnerable businesses that may have been unstable a year or two ago ago have turned a corner. For those who were struggling, the situation has improved and they’re now in a more favorable position. As long as there are no major external factors to disrupt the economy, most SMEs should be in good shape for the foreseeable future.
Furthermore, there’s a downward trend of revenue contracting. Only 8.5% of SMEs expect their revenue to contract in 2019 with an average of 5.5%. But considering the maximum revenue drop is only 12.2% — 1.5% lower than the previous round — things are looking up for Australian businesses as a whole.
It’s important to note that In 2018, more than 12% of business owners were experiencing diminishing profits. But in March 2019, that number fell by 3.5%, marking a record jump in the number of SMEs who were shifting from a “contracting” to “stable” phase.
And when you combine growth and non-growth SMEs, “total average revenue projections have more than doubled year-on-year since 2016 — from 0.7% to the current 1.8%.” So when you look at the big picture, it’s clear that Australian businesses are trending in the right direction.
Although desirable and critical to the long-term success of a business, growth can also present cash flow issues. To keep up with consumer demand and stay on track, SMEs need a viable means of obtaining steady cash flow.
While 11% of businesses had no formal strategy as to how they would invest in business growth, the vast majority did have a game plan. So how are business owners generating the capital they need to accommodate growth?
Here’s how it breaks down:
It’s clear that many companies are feeling the pressure to grow, given that 69% of business owners used their own credit cards to increase cash flow in March 2019, which was up from just over 66.5% a year earlier.
Offering discounts for early payments has risen considerably and jumped from 50% the previous year to 56% in 2019. This means that many SMEs are willing to come down on their pricing slightly in exchange for quicker payment terms.
Also, the number of business owners making arrangements with the ATO has noticeably risen. While only 16% did this in 2018, one in five did so in 2019.
In terms of cash flow strategies that have remained the same, these include taking out or increasing an overdraft, obtaining funding online and running credit checks. The one strategy that’s declined from 2018 to 2019 was debt collection, with just over 4% of business owners utilising it this year.
Beyond that, there are a few other noteworthy trends that deserve mentioning.
There are a fewer number of full-time employees in Australia. According to the Index, “The average SME respondent’s full-time employee headcount continues to downtrend, falling from 71 in the last round to 69 now — it was 88 in the first round in September 2014.”
This phenomenon is confirmed by The Reserve Bank of Australia, who says there’s been a growing trend of part-time employment throughout much of the country. They also mention that Australia has one of the highest shares of part-time employment among the Organisation for Economic Co-operation and Development (OECD) countries.
Trimming back the number of full-time employees has created more flexibility in the workplace so SMEs can stay nimble with fluctuations in demand and keep labour costs down — both of which can accelerate growth.
1 in 10 SMEs are choosing to lower their overall sales to minimise cash flow issues. For those who can’t come up with a viable means of boosting cash flow, a small percentage are electing to intentionally slow their growth to avoid growing pains.
While this probably isn’t the ideal route for most business owners, it definitely makes sense in certain situations. With that said, it’s important for SMEs to explore all of their options, which brings us to our final point.
One issue that’s a growth deterrent to business growth is slow paying clients. Australian businesses ended up spending more time hunting down invoices this year — a cash flow strategy for 14.5% of businesses in 2019 versus just 12% in 2018.
Research from software company Xero found, 62% of SMEs dealt with late or unpaid invoices within the last year. This has a trickle-down effect that places business owners in a tough position where many have difficulty paying their own suppliers as well as their employees.
As a result, there’s a growing interest in debtor finance and invoice finance, where SMEs obtain a line of credit by using outstanding invoices as collateral. In fact, it went from being used by only 7.5% of companies in 2018 to 11% in 2019.
With most invoices approved within 24 hours and business owners able to receive up to 85% of the value of their invoices, it’s proven to be an effective way to boost cash flow and quickly gain access to capital that would otherwise be tied up for several weeks or even months.
Data from the March 2019 Scottish Pacific SME Growth Index Report shows that revenue growth is rising for many Australian businesses. The current economic climate looks promising, and SMEs are in a position to thrive.
However, it’s vital that business owners stay on top of growth and develop a viable strategy for obtaining necessary cash flow. For more information on this, please contact Scottish Pacific today.
Do you feel you have enough cash flow to keep up with the current growth of your business? Click here to have us touch base or call today on 1300 505 883
Read more
Handling taxes is notoriously complex for Australian businesses. It can be overwhelming for SMEs, especially if you lack a dedicated, in-house accounting team.
But it’s vital to understand relevant tax laws, what your company tax rate is and how to properly report this information. This ensures you stay in the clear with the Australian Tax Office (ATO), while avoiding unnecessary penalties and headaches.
Here’s everything you need to know about corporation tax.
The corporate tax rate has fluctuated over the past 45+ years.
Trading Economics explains, it was at 45% between 1973 - 1979. It jumped up to 46% from 1979 - 1986, and rose again to reach its highest at 49% from 1986 - 1988. It has since dropped considerably.
Here’s a breakdown of what the corporate tax rate has been from the late 80s to today:
The full company tax rate is 30% and should remain there for the foreseeable future. This applies to companies, corporate unit trusts and public trading trusts.
Today’s companies pay considerably less for corporation tax than organisations in the past. In fact, it’s now 19% lower than it was at its peak between 1986 - 1988. 30% is actually a record low for Australia.
But as Shane Wright of The Sydney Morning Herald reports, Australia’s corporate tax is still one of the highest in the world. As of January 2019, it was the third highest globally, with only Costa Rica and Chile having higher rates.
For comparison, Australia’s prime competitors such as the United States, Britain, New Zealand, Canada and South Korea all had lower rates. The United States, for instance, is currently at 21%.
Not all companies pay a 30% corporate tax rate, however. Those who are classified as base rate entities are eligible for a lower company tax rate of only 27.5%.
The ATO explains, for the 2017 - 18 income year, a base rate entity is a company that both:
Base rate entity passive income can include royalties and rent, corporate distributions, gains on qualifying security and interest income.
The bottom line is that you can expect to pay a 30% corporate tax rate unless you qualify as an eligible base rate entity. In that case, you would only pay 27.5% until 2020. However, that is set to change in the near future.
Initiatives to lower the corporate tax rate will be taken in the near future, meaning corporate tax for base rate entities will drop over the next few years.
Companies who qualify will still pay 27.5% from 2018 - 20, but the aggregated turnover threshold will increase from $25 to $50 million AUD. After that, they’ll pay 26% with an aggregated turnover threshold of $50 million AUD from 2020 - 21. The following year, they’ll only pay 25% with an aggregated turnover threshold of $50 million from 2021 - 22.
In other words, corporation tax is decreasing for base rate entities over the next few years and will drop a total of 2.5% between 2017 - 18 and 2021 - 22.
Besides understanding what your company tax rate is, you need to know the basics of filing.
The Australian Government’s website, Business.gov, explains, “A company business structure is taxed as a separate legal entity that does its own tax return.”
They must lodge an annual company tax return, which includes company income, deductions and the income tax it’s liable to pay. Business.gov also points out companies must lodge their own tax return, and if an associated trust is involved, then they must lodge their own tax return as well.
Note: “As a director, if you draw wages as an employee or receive dividends from the company, you must report this as income when you lodge your own individual return. You may also need to lodge a fringe benefits tax return, if you receive fringe benefits.”
It’s important to get all your ducks in a row to ensure everything is reported properly. It’s also crucial that it’s done on time.
Tax returns for Australian businesses cover the time between 1 July and 30 June and are due by 31 October. Not filing on time is what’s known as a Failure to Lodge (FTL), which can potentially lead to penalties. The cost of the penalties can vary and is primarily determined by the size of your company.
Here’s how that breaks down.
The ATO says, “For a small entity, FTL penalty is calculated at the rate of one penalty unit for each period of 28 days (or part thereof) that the return or statement is overdue, up to a maximum of five penalty units.”
This becomes larger for a medium entity with turnover of more than $1 million and less than $20 million AUD, where the penalty is multiplied by two. And it increases again for a large entity with turnover of $20 million or more, where the penalty is multiplied by five.
So the larger your company, the more severe the penalty.
It should be noted that the ATO is fairly understanding and accommodating when it comes to FTL. Organisations generally aren’t penalised when it’s an isolated incident, and warnings will be given either over the phone or in writing before incurring a penalty.
That said, it’s still extremely important to stay on top of corporation tax and take measures to ensure it’s taken care of by 31 October.
If there’s an issue where you have difficulty meeting the deadline or fulfilling your tax obligations, you should contact the ATO via this link. A registered agent can work with you to figure out a solution.
There’s one last thing to point about in terms of meeting ATO compliance standards.
You must retain your corporate tax records for five years. This is a required tax law, and the ATO can potentially penalise you for not retaining records for this length of time.
So be sure to keep everything on file so information can be quickly retrieved. Having both physical, paper documents as well as digital versions is ideal.
The information above covers the fundamentals of corporation tax and what you need to know to correctly file your taxes.
Here are some ways to simplify things and streamline the process.
Keeping organised, accurate records is vitally important. That’s something managing director at Australian Invoice Finance, Greg Charlwood, can’t stress enough.
You need an efficient, well-run filing system that provides you with a detailed snapshot of your company’s earnings at all times. Not only does this save time come when lodging and prevent frustration, it can be a godsend in the event of an ATO audit. It ensures that you’ve always got a paper trail and earnings can be easily traced.
Investing in a comprehensive corporate tax software like ONESOURCE is perfect for SMEs and offers a straightforward, cloud-based solution.
Charlwood also mentions it’s a good idea to write off bad debts before 30 June rolls around. If you’ve incurred a bad debt or partial bad debt because of a client failing to pay in full, it can be claimed as a deduction if it was included in your company’s assessable income.
In the event that a client doesn’t pay or doesn’t pay in full, this can help offset your costs.
This only applies to newer businesses with a turnover of less than $10 million AUD. But if your company falls into this category, you can claim a tax deduction for certain costs including:
While this may not have a huge impact, it should still be helpful and lower your overall corporation tax.
There’s a lot involved with Australian corporate tax. And it’s easy for SMEs to be confused and overwhelmed sorting through all of the details.
What’s most important is knowing what tax percentage you owe annually, whether you’re eligible for a base rate entity, correctly lodging corporate taxes on time and retaining tax information for five years.
Do that, and you should have a firm grasp on corporation tax, and your company should be in good shape.
What do you find most confusing about corporation tax? Please let us know about your experience, call us on 1300 505 883, or click here for us to get in touch.
Read moreHaving a recession-proof business is only more important in today’s climate. With the economic realities of the modern world being more difficult to predict and sometimes more drastic in their suddenness, knowing how to best mitigate the risks of a recession to your business is a must. What is a recession? A recession is a […]
Read moreRising wages and compliance costs top the list of growing cost pressures for Australian SMEs, with small and medium businesses in NSW the most heavily impacted. The findings were contained in the latest round (Q1, 2023) of the bi-annual SME Growth Index by ScotPac, Australia’s leading non-bank business lender. Asked to name the top three […]
Read moreCash is always king but never more so than during the pandemic and recovery. Many small businesses are hoarding cash and staying on the sidelines until they feel confident enough to invest in their own growth. This is a key takeaway from the March 2021 SME Growth Index, with results showing that over the past […]
Read more
