Top 3 Tips To Clear Your Tax ArrearsNov 01 2019 in Cash Flow Finance
Tax arrears are an increasing cause for concern among business owners as falling behind has serious repercussions on growth and profitability. According to the Australian Taxation Office (ATO), it is the primary cause of business liquidation.
Aside from the financial stress it can cause, battling tax arrears can divert your energy away from important activities such as growing your business.
Tax arrears can also put you at a disadvantage when seeking finance, as some lenders will consider tax liabilities as added risk and can increase their pricing accordingly.
Here are three ways to get rid of tax arrears and get back in control of business finances:
- Keep On Top Of Your Expenses And Cash Flow
Businesses in the start-up phase often run into financial difficulties during the second year when they receive their provisional tax invoice. Typically, a large amount of money is invested in costs such as equipment purchase, recruitment, rent, salaries, and marketing.
If your business does not have adequate cash reserves, you could struggle to meet your tax obligations. Cash flow is the heart of a healthy business, and one of the ways to ensure you have sufficient cash is to pay your taxes on time is through having the right finances in place.
Cash flow management is important at the operational as well as business level. Both are needed to help you plan your business’ financing needs.
With operational cash flow management, you are essentially mapping out cash coming in and going out of your business weekly for the next 8 to 12 weeks. It helps in identifying any blips in your cash flow from month-to-month.
Strategic cash flow management is about the bigger picture where you look at monthly cash flow for the coming 12 to 18 months. It’s about understanding the cash flow implications of your business strategies. It’s what you need to find out how much cash your new growth strategies will generate. You will also know how much money is required to fund growth objectives.
- Enter Into A Payment Arrangement
If you’ve fallen into tax arrears, it’s important to settle your dues as soon as possible.
One of the ways to reduce your tax outstandings is to enter into a payment arrangement with the ATO. This is essentially an arrangement where you agree to make deferred payments until your tax is paid off.
This will improve your cash flow position and take back control of your business.
- Use Cash Flow Financing To Clear Tax Arrears
An effective strategy to improve cash flow and clear tax arrears is through cash flow financing.
Through cash flow financing, you can receive an immediate inflow of cash from the cash flow finance company. The cash can be used to pay taxes as well as expansion opportunities.
Essentially, cash flow financing allows you to unlock funds owed to you before they are paid by your clients or customers. Cash flow financing can also relieve you of the burden of following up with clients or customers, as this can be taken care of by the cash flow finance company. This can free up your accounting staff’s time and reduce overhead costs.
At BCashflow Positive, we make the process of cash flow financing simple and fast. Up to 90% of your invoice value is made available to you in as quick as 4 hours. The remaining 10% is credited once your client pays us.
There are no hidden costs or quarterly audits required. You choose what invoices you would like funded and leave the rest to us. It is also free to apply and we will get back to you within 24 to 48 hours with a response.
If you’re looking to bring your tax arrears under control and would like to take advantage of supplier early payment discounts, finance business growth or boost cash reserves, then give us a call on 1300 937 292 or Click Here to get a quote.