According to national SME finance specialist, Scottish Pacific, many small businesses may be using the Australian Tax Office (ATO) as a line of credit being unaware of alternative funding solutions.
Scottish Pacific CEO, Peter Langham said the ATO was owed $35.3 billion in 2013-14 according to a recent report by the Inspector-General of Taxation.
“It is an astronomical amount the ATO is chasing. Given the size of the debt, the ATO is likely to make it much tougher for small businesses to run up debts in future, so it’s a great time for SMEs to look at better ways to improve their working capital,” Mr Langham said.
Mr Langham suggested that SMEs may not be aware of how they can use invoice finance to help meet ATO obligations and grow their business.
“Getting the right commercial finance to support your business – and help it thrive, not just survive – is really not that onerous. There might be a few more forms to fill in, but you’ll end up with working capital to fund business growth.
“Our message to SMEs is don’t use the ATO for convenience purposes, because while it might seem like a short-term fix for your cash flow problems, it’s just delaying the inevitable and it’s doing nothing to provide your business with the working capital you need to thrive,” he said.
Mr Langham said that there are many other options open to small businesses to secure more flexible funding solutions.
Attribution: Are small businesses using ATO as bank?