New data reveals thousands of private Australian businesses folded over the past six months after defaulting on massive tax debts.
Small businesses have a lot on their plate right now. Many face a tight labour market, high costs, and the lingering aftermath of a supply chain crisis as well as soft consumer demand.
As if this wasn’t enough, new data from CreditorWatch1 reveals that thousands of private Australian businesses have failed in the past six months after defaulting on massive tax debts. The latest data on Australian Taxation Office (ATO) tax debt defaults – debts of more than $100,000 that are over 90 days late – shows 34% of these private businesses (7,003 in total), have become insolvent or voluntarily closed in the six months that CreditorWatch has been tracking the data.
“34% of private businesses with tax debt defaults… have become insolvent or voluntarily closed”
OnDeck CEO, Cameron Poolman, says, “No business enjoys being the subject of unwanted ATO attention. But in the current economic climate, having an outstanding tax debt would be extremely challenging for many business owners.”
A tax debt can arise for many reasons. However, Cameron explains that by encouraging small business clients to monitor cash flow, brokers can play a valuable role helping enterprises avoid a small tax debt snowballing into a serious, and potentially unmanageable, problem – one that an enterprise may not be able to trade its way out of.
“It comes down to an ounce of prevention being more effective than a tonne of cure,” says Cameron. “There are professional services available for small businesses to restructure if this is a viable solution to managing outstanding tax debts. An enterprise’s accountant should be the first avenue of approach here. But restructuring can be a complex process, and one that should be seen as a last resort as it may not be suitable for every business.”
This is an area where brokers can offer valuable support to small businesses, having conversations with clients about the health of their cash flow before the enterprise begins to amass a tax debt.
How brokers can help clients
“Healthy cash flow can allow a business to pay its tax dues on time, as well as delivering other benefits such as securing early payment discounts from suppliers, or avoiding late payment penalties for ongoing bills,” says Cameron.
“A good cash flow allows an enterprise to cope”
“Importantly, a good cash flow allows an enterprise to cope when customers are slow to pay, or to take advantage of opportunities to boost revenue such as expanding product range.”
The catch is that lending for small businesses is typically an area neglected by many of the larger banks.
“As a dedicated small business lender, OnDeck understands that small business owners and their brokers need a fast, efficient application process coupled with a rapid turnaround time to have funds available in their account,” notes Cameron.
“Approved businesses can have their Lightning Loan funded in hours”
That’s why we offer Lightning Loans, available from $10,000 to $175,000, with businesses only required to provide six months’ worth of business bank statements upfront, and a personal guarantee. No asset or security is required, taking that additional stress away.
For larger loans, our Lightning Loans Plus offers up to $250,000 in funding.
Our application process is fast and simple, with businesses able to apply via their accredited OnDeck Broker or via our secure online portal.
From there, approved businesses can have their Lightning Loan funded in hours.
Together, we can help Australian small businesses thrive
In today’s often challenging commercial market, brokers, in partnership with their lenders can play a key role helping their small business clients navigate the headwinds.
If you have an OnDeck client that may need support with their existing of a new loan, please reach out to us so we can work together to try and find the right solution for them.
For more information head to our broker webpage, email broker@ondeck.com.au or call our broker support team on 1800 676 652 (Opt.5) .
Disclaimer:
[1] https://creditorwatch.com.au/blog/thousands-of-businesses-close-after-racking-up-massive-tax-debts/
This article is for general information purposes only. Content may belong to or have originated from third parties and OnDeck takes no responsibility for the accuracy, validity, reliability or completeness of any information
OnDeck cannot give tax advice. Any tax considerations outlined in this document are general statements, based on an interpretation of current tax laws, and do not constitute tax advice. As such, you should not place reliance on any such taxation considerations as a basis for making your decision with respect to the product. As the tax implications of investing in a OnDeck product can impact individual situations differently, you should seek specific tax advice from a registered tax agent or registered tax (financial) adviser about any liabilities, obligations or claim entitlements that arise, or could arise, under a taxation law.
