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Life as a small business owner, freelancer or tradie isn’t always easy. According to a recent small business report, only 60 per cent of small business owners survived between 2007 and 2011, implying that a large number failed or simply quit. Fortunately though, help is available from a number of sources, whether you are simply struggling or are on the verge of going under.

Tough times

If you have decent short-term cash flow but are worried about the long-term health of your business, it may be wise to hire a business consultant while you still have the funds to pay for advice.

Small business consultants can help you identify areas for improvement, formulate long-term strategies and teach you the necessary skills to help you implement changes.

There are a huge number of consultants vying for your business, but it is important to choose one with the right subject matter experience and ideally with expertise in your industry and with businesses of the same size, and even better if you can find one with a proven track record of helping small businesses get out of holes.

Struggle street

If creditors are getting on your back as the bills start to pile up, who should you call?

The first place small business owners should head to is the Australian Government’s business website . The site contains heaps of information including the legal and procedural choices and obligations small business owners have when they run into financial trouble.

In addition to the handy guides, the portal advises you how to handle bankruptcy, liquidation and dissolution, should it come to that. There are also links to a help hotline, a web chat and an online enquiry form if you are seeking more tailored advice, and the best part is that the assistance is free.

Chasing debtors

If your tenuous financial position is caused by customers not paying you in a timely manner, you have a few choices. You can use traditional invoice factoring or try Prospa’s new solution called InvoiceNOW, that enables you to turn 100% of the value of your unpaid invoices into cash in the bank within 24 hours using your Xero data. Find out more about our invoice finance solution here or call us on 1300 411 340.

You still need to force payment of those outstanding invoices, so it may be time to seek external enforcement of the debt. Most small business don’t have the resources to chase overdue bills, so consider using a debt collector. A debt collector will issue a letter of demand, which if ignored then entitles them to pursue legal action against the debtor. The downside of pursuing this method is that you must pay the debt collector a commission, usually between 5 to 30 per cent of the recovered fee, and it may permanently damage your business relationship with the debtor.

Alternatively, for claims under $25,000, you may be entitled to take your issue to your local state or territory small claims tribunal. Find links to these and other helpful agencies here.

Tax troubles

The Australian Taxation Office (ATO) can provide financial assistance to small businesses who are having trouble meeting their tax obligations due to challenging business conditions or unforeseen events impacting upon their ability to pay.

The ATO can offer interest-free payment plans for activity statement debts for up to 12 months, provided your small business has a history of meeting tax lodgement and payment obligations.

Nearly broke

The Australian Financial Security Authority (AFSA) provides improved and equitable financial outcomes for consumers and businesses. The AFSA can help you get in contact with a financial counsellor free of charge, who can help you manage short-term crises and help you plan for the future.

The AFSA will also help you connect with obtaining free or subsidised legal assistance if you are suffering hardship, and if necessary, instruct you on how to represent yourself in court or at a tribunal.

Going bust?

Before giving up on your business completely, seek help from your accountant to see if you can get some more time from creditors. The next step is going into voluntary administration, in which an administrator will be put in charge of your company; or receivership, if a secured creditor appoints a receiver to ensure repayment of their debt.

If all fails, the final step is liquidation, in which the company is wound up, with all assets sold to repay debts.

It’s always better to address financial issues before the situation gets out of control. Make sure you contact Prospa to see if you are eligible for a business loan. By taking action quickly and seeking assistance, you can give yourself a chance to fulfil your entrepreneurial dreams.

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