Practical Tips for Managing Debtors and Improving Cash
Flow
At a Small Business Summit in July 2015, the Commissioner for
Taxation indicated the ATO will now take a more aggressive approach
to debt collection and is prepared to wind up insolvent businesses
far sooner than it has in the past.
Historically, the ATO has not initiated recovery action until a
tax debt was over $340,000 compared to other creditors who initiate
action at an average of $93,000. The Commissioner indicated the ATO
will move toward that average.
The clear message was that businesses can no longer put tax
debts last to supplement their working capital. With 90% of SME
failures already caused by poor cash flow, the ATO's position
elevates the importance of actively managing the cash flow
conversion cycle in your business. It is more than just good
practice: it is key to SME survival.
