An online busines lender has highlighted the important role brokers can play in supporting their SME clients as new legislation is introduced by the Australian Taxation Office (ATO).
In less than two months, brokers and their small business clients will be required to transition to Single Touch Payroll (STP) to help address the $15bn SMEs owe to the ATO. However, Matt Bauld, executive GM of sales and business development at Prospa, says it will put additional pressure on SME cash flow.
“This is an ideal time for brokers to advise their small business clients of these impending changes so they can help them manage any potential cash flow challenges,” said Bauld.
Prospa is offering a suite of educational resources and communications to help brokers and their small business clients prepare for the change.
According to a study by Wakefield Research, SMEs already face significant cash flow challenges. Half of all Australian businesses have lost out on $10,000 or more by foregoing a project or sales “specifically due to issues created by insufficient cash flow”. Crucially, 46% of small business owners have been at risk of not being able to pay employees by payday.
“STP may be the opportunity to get your house in order as an immediate priority and ensure all entitlements are up to date before June 30,” Bauld added.
“Brokers should talk to their accountant for advice and may want to consider a business loan if they need to bridge cash flow gaps during this time.”
The STP legislation will extend the real-time payroll reporting passed earlier this year to include businesses with fewer than 20 employees, which must now also provide gross, tax, net and super details to the ATO at the time their employees are paid.
The legislation is intended to give ATO instant visibility on payroll transactions, enabling the office to better manage debtors and reduce the number of outstanding debts.