Maintaining steady cash flow is crucial for any business. Managing incoming and outgoing payments to do that, however, is nearly impossible. The average business owner spends nearly 8 hours per week just chasing down later payments. These tactics alone simply aren’t enough to keep a business solvent, particularly considering all the unexpected ways that a carefully managed budget can be derailed. Once normal cash flow is interrupted, it can be very difficult to get things running again. Business owners are often left in an unsustainable situation, deciding whether employees will be forced to deal with late payment, important shipments will be delayed, or the business’ power bill will be paid late.
The Victorian Trades Hall Council, a Victoria union, is pushing for a 10 year jail term for businesses that willfully withhold the entitlements of their workers. This comes as Australia is rocked by scandals involving wage theft and superannuation underpayments by both small and large employers. Unpaid compulsory superannuation payments alone amount to as much as $5.6 billion withheld from 2.4 million Australian workers every year.
The greatest risk of failure for new businesses has largely been found to be in their first year. Considering that many of these businesses are launched by first-time entrepreneurs without significant experience and limited funds, this isn’t necessarily surprising. What may come as a shock is that the next most dangerous time for a small business is several years later, after it has already established itself and proven its viability to potential investors.
Fairfax media reported that the Australian government is planning to implement a new tax on the receipt of overseas packages valued below $1000. In theory, this new tax would cost approximately $5 per package. The levy is expected to raise as much as $200 million in the short term to cover the cost of customs inspections, and rising more as shipments to Australia are expected to increase in the coming years.
Unlike many of the big name CEOs we’ve talked about, the average person is unlikely to have heard of Jay Flatley. He isn’t staggeringly wealthy like Jeff Bezos or Elon Musk, doesn’t give lengthy interviews about his ideas or business philosophy like many of the US’ great tech entrepreneurs, and doesn’t write books. Despite all this, it’s very likely that the work he and his business, Illumina, have done in the past 20 years will have a more significant and personal impact on our lives than any of the other business leaders we’ve covered.
In recent years, the scale and economic significance of data breaches has increased dramatically. IBM’s 2017 Pomenom Cost of Data Breach study placed the average cost of a breach at $3.62 million. Beside these more mundane breaches, massive data disasters like the 2017 Equifax hack can affect millions, in this case hundreds of millions, of individual consumers and businesses.
The Australian Securities and Investments Commission (ASIC) has indicated this week it will begin cracking down on violators of unfair contract terms rules. This comes several months after the big four banks agreed to eliminate a number of unfair terms in August of 2017, bringing them into compliance with legislation that initially required them to implement these changes by November 12, 2016.
The Australian Tax Office (ATO) has announced that it will be rolling out its Single Touch Payroll (STP) initiative this coming July. This new program is designed to resolve a number of employee payroll and tax issues that have made headlines in recent years, while also forcing Australian businesses to digitise their payroll systems. This will not only give the ATO a better real-time view into individual businesses’ payroll practices for tax purposes, it will help to protect workers. Specifically, this will allow the ATO to much more easily track and prevent widespread payment problems like the $5.6 billion in superannuation underpayments that were found to plague 2.8 million Australian workers in 2017.
In Australia, 19 out of 20 is an often-cited rate of failure for small businesses in their first three years, and the most commonly cited cause of those failures is finance related. Given recent news, this might seem surprising. After all, according to the Australian Bureau of Statistics and the independent advisory firm HLB Mann Judd, 90 per cent of small businesses who sought financing were successful in 2017.
Businesses rely on a variety of types of financing to launch, maintain, and grow their operations. Starting capital is often accessed through large bank loans or investors, while ongoing cash flow demands can be managed using a variety of shorter term financing solutions.