Paying your creditors on time is essential for maintaining strong business relationships and ensuring your company’s growth. Your primary creditors include the Australian Tax Office (ATO), financial institutions, and other creditors to whom you owe money.
Here’s why timely payments matter and some tips to help you manage them effectively.
1. Australian Tax Office (ATO)
Lodging your Business Activity Statement (BAS) on time and paying the ATO in full is vital for maintaining good standing and ensuring your business can access necessary resources. Late payments can be viewed as poor conduct, potentially affecting your eligibility for government assistance and financing options.
Tips for Timely ATO Payments:
- Maintain accurate records of sales, expenses, and wages.
- Reconcile your sales records with bank statements to ensure accuracy.
- Use the correct GST accounting method (Cash or Accrual), that suits your business operations.
- Keep all tax invoices and supporting documents for at least five years as required by the ATO.
- Include tax payments into your cash flow projections, setting aside funds to alleviate pressure when payments are due.
- If you’re unsure about any aspect of your BAS or tax obligations, consult with your accountant.
2. Financial Institutions
Timely loan repayments are essential for maintaining a good relationship with lenders. Late payments can harm your credit rating and affect your ability to secure future funding. This may impact your ability to invest in equipment and grow your business.
Tips for Timely Loan Payments:
- Arrange for loan repayments to be automatically debited from your account, reducing the risk of missing a payment.
- Maintain a minimum balance in your account to avoid overdraft fees.
- Set reminders for payment due dates even if you have direct debits in place. This keeps you informed and allows you to monitor your account balances effectively.
- Review your loan statements regularly to ensure that payments are being processed correctly without discrepancies.
- Communicate with your lender if you except any challenges in making payments. By reaching out to your lender proactively many institutions are willing to discuss options or temporary arrangements.
- Incorporate loan repayments into your monthly budget to help plan your cashflow and ensure funds are available.
3. Other Creditors
Timely payments to your business partners and suppliers is essential for building trust and strong relationships.
Tips for Maintaining Good Business Relationships:
- Monitor your creditors report daily to stay updated on what is owed and payments due.
- Clearly outline payment terms in contracts to reduce the likelihood of misunderstandings and late payments.
- Utilise accounting software to track invoices and set reminders for payment due dates and manage finances more effectively.
Timely payments to the ATO, financial institutions, and other businesses are vital for your business’ success and growth. If you need assistance with managing payments, contact us today!
Contact us on 07 4639 1011 to find out more. We are committed to helping Australian businesses thrive by providing tailored finance solutions that meet your unique needs.
LinkedInDisclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.