Small and medium sized enterprises (SMEs) are increasingly being starved of cashflow which is likely to have a major impact on jobs and business growth next year, warns Simon James, partner at accountants and business advisers HLB Mann Judd Sydney.
“The changes to the timing of corporate tax collection, announced by the government this week, is a double negative for SMEs, tightening cash flow while at the same time potentially adding to record keeping requirements.
“SMEs are already facing cash flow problems with many large businesses reducing billing cycles and creditors being less willing, or less able, to meet terms of trading.
“While SMEs themselves may not need to pay their company tax on a monthly basis, they are likely to have suppliers or customers who will, and who are likely to tighten their own payments systems. This will have a knock-on effect on SMEs and their cashflow.
“At the same time, credit card companies and some utilities, as well as telcos, are all allowing less time to pay before penalties are incurred,” Mr James said.
He said that at the smallest end of business, tradespeople are reporting that customers are extremely slow in making payments, and some simply offer a reduced amount in cash.
“This is institutionalising the black economy and forcing tradesmen to cut their losses for cash in hand.
“Small businesses and the self employed often feel helpless to do anything about this as they do not have the time, or desire, to pursue debt through the court.
“The overall result is that the energies of SMEs are focused on ways of cutting costs and simply holding on, rather than growth,” he said.
HLB Mann Judd Sydney is a firm of accountants and business and financial advisers, and a member of the HLB Mann Judd Australasian Association.
For more information please contact:
Simon James – Phone: 02 9020 4212
25 October 2012