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Avoid ATO wind up action with Flexible Invoice Finance

July 23, 2015

With the sudden increase in wind up applications for SMEs – could you be in danger?

In recent months, businesses owing the ATO (Australian Tax Office) $100,000 have been wound up, as the new crackdown kicks in. This indicates a clear change of focus, likely to be due to the Government’s attempt to recover unpaid revenue.

With applications by the ATO to wind up companies soaring, the message is clear – get a payment plan in fast. Otherwise your company could be at risk.

The ATO are toughening up

With Western Australia poised for blow out, as debt levels surge and revenues dive, the ATO have been forced to get tough. Thus resulting in them taking quicker action to recover debts, such as company winding up proceedings and initiating bankruptcy proceedings.

Wind up action explained:

When a court orders a company to be wound up, an official liquidator is appointed to sell the company’s assets and distribute the resulting funds to the company’s creditors.

This action will be taken up if a company has failed to pay its debts and has not been able to make a suitable payment arrangement.

Why the sudden stricter rules?

Previously, the ATO would usually have waited for a company’s debt to them to reach around $340,000 before taking action. However the new standard is coming in on average at $93,000 – showing a huge drop.

The motivation – the government has a strong desire to recover funds.

Given the ATO is a substantial driver of the current volume of insolvency appointments, the expected increase in debt recovery action by the ATO results in taxpayers who fall behind not having so long to resolve issues before the ATO makes the decision for them.

After a business is wound-up, their assets are then liquidated in order to cover the unpaid tax bills.

Alternative Finance is a must – consider flexible invoice finance

Last year, thousands of businesses where closed down to meet unpaid tax bills, showing just how important it is to be able to access alternative finance for urgent commitments such as tax payments.

This policy is not a new one and was actually updated back in June 2013, stating that the Government would be taking firmer action, although, until now it appears that they had not been keeping on top of the stricter policy.

Who will it affect?

Small and medium sized businesses appear to be the ones suffering from the hit.
Many SMEs (Small Medium Enterprises) can show profit on paper, but still suffer from poor cash-flow. Not only can this mean they struggle with urgent payments, but also often prevents growth of a business. This is where Debtor Finance and flexible invoice finance comes in.

How the wind up action could affect you

Now the ATO have warned you that they will be taking legal action earlier, plus issuing penalties in order to collect unpaid revenue – you are lucky enough to be able to take action before it is too late.

Factoring can give you piece of mind and more opportunity.

How using a factoring company can prevent your company being affected…

The answer to avoiding the wind up action is simply – pay your ATO bills on time. However, sometimes this is easier said than done. If there is a gap between when a bill is due and when a clients payment is made, that is where the issue occurs.

Factoring enables you to draw funds from your accounts receivables to pay your ATO bills. To have this explained in further detail, click here.

Next steps:

With the number of wind-up applications lodged by the ATO steadily rising, as a small business you could be next.

For small businesses that looked at the July 31 tax payment deadline with dread – you’ll never want to feel that way again. Make sure you have funding in place to cover the pressing payments, oppose to scraping through, or worse, not making it to the following year.
Planning ahead is the key – address ways you can manage your cash flow more effectively, such as alternative finance to reduce risk of any financial shocks or hidden fees.

Far too many businesses are leaving it too late to seek assistance, take note from the recent ATO activity:-
1. The ATO are more aggressively pursuing debts, even as little as $93,000
2. A winding up application is the last step the ATO will take after the ATO has exhausted all other recovery options, so don’t leave it till then
3. Any business with an outstanding taxation debt and no current repayment arrangement in place is at risk of being wound up by the ATO.

Are you at risk?

The best opportunity for recovery for a business is to seek professional advice early.

Act now to find the funding you need to meet your tax obligations.

Enquire now

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What our customers are saying

  • With the constant challenge of rising fuel costs and operating expenses, we would struggle to maintain our growth without Key Factors Factoring Facility. A more predictable cash flow allows us to get back on the road and pay our drivers on time.

    - Director, Transport Company, QLD
  • In today’s economy, many businesses are struggling to manage their cash flow and trying to avoid getting into the cycle of you’ll get paid when we get paid. As a small business owner, the best thing has to be getting the cash into our account as we issue invoices, without having to wait 30, 45, or sometimes 60 days to get paid. We have been long standing clients and are very happy with Key Factors service. Their facility is simple to use, and the staff are always helpful.

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    - Company Accountant, Recruitment Company, QLD

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  • Invoice your clients for goods and services
  • Send a copy of your invoices to Key Factors
  • 80% of the invoice face value is made available to you within 24 hours, less a discount rate
  • The remaining 20% is provided when your customer pays, less any accrued charges
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FAQs

FAQs

How much does it cost?

We only charge a discount rate on what you use. There are no ongoing monthly charges or annual charges.

Do I need to factor all my invoices?

No, Key Factors flexibility means you are not required to submit all your invoices for funding.

What invoices can be considered for funding?

Invoices relating to business-to-business transactions can be considered, not consumer receivables. Invoices which are still within normal trading terms not... More info

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