Unpaid bills dampen the Christmas spirit.
That’s how insurance broker and risk consultant Richard Labrador feels every time the festive season rolls around. He blames clients’ carelessness or inattention as the cause of unpaid bills.
“I know they’re also busy with their holidays and that’s their priority. I understand that, which is why we end up with emails and phone calls to follow up,” says Labrador.
Unpaid bills make you feel cheated
But when you’ve paid for a service a few weeks ago and haven’t heard from them, it can feel like you’ve been cheated.
“I thought we had a good relationship and suddenly they don’t want to pay. It’s not a good feeling.
Labrador is one of almost half (46%) of Australian small and medium sized businesses (SMBs) who have experienced financial pressure due to unpaid invoices.
Damien Greathead, Head of Accountant and Advisor Segment at Intuit Australia, says: “We have research that shows there is a potential $22 billion in invoices that are expected to go unpaid before 25 December. This adds to the financial pressure on SMBs”.
In addition, almost a third of SMBs (32%) will resort to using their personal funds to cover cash shortfalls to keep the business afloat over the Christmas period.
Labrador wishes he was an exception, having just moved into a newly purchased home with a newborn baby in the picture. It’s a good thing he’s prepared for the slow season, which includes December and January.
“I spend more than I earn; [but the good thing is] I’ve budgeted for the whole year and I’ve saved for the lean season.”
An ongoing relationship
But for other SMEs struggling with cash flow this festive season, Greathead’s advice is to “make sure you have a really good accountant or bookkeeper in your corner”. 29% of businesses use an accountant at tax time, but not as an ongoing relationship throughout the year.
“There is a lot of value that an accountant or bookkeeper can add to your business. They will help you understand the numbers. It will help you put together a cash flow plan. Make sure you’re making the most of the tools you’re using to run the back end of your business.
