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At one point or another, otherwise healthy, thriving SMEs find themselves with ATO debt due to unforeseen circumstances. Even if they're meeting ATO payment plan obligations, they may be prevented from obtaining further lines of credit, limiting cashflow and inhibiting growth.
If you have clients that are in this situation, the Classic Funding Group team have shortlisted three potential options to resolve their predicament.
1. SALE-BACK
Sale-Back of existing equipment is one solution. Your client effectively sells their eligible assets to a financier and leases them back on a term that suits their cashflow, using the funds raised to repay ATO debt.
Whilst these transactions are often more complex than a standard equipment finance arrangement and may take more time, the solution might be practical for clients that have capital tied up in assets.
Is Sale-Back a solution for your client?
· In business for a minimum of 2 years
· ATO debt is not an ongoing issue & there is a reasonable explanation for why the debt occurred
· Business is meeting all ATO payment plan obligations
· Sufficient assets to satisfy the ATO debt
2. DEBTOR FINANCE
Where your client does not have suitable plant and machinery to use for a Sale-Back facility, a Confidential Debtor Finance facility may be a viable option.
Also known as Invoice Discounting, Confidential Debtor Finance releases up to 85% of equity trapped in unpaid invoices, and may be a good way to raise capital to repay ATO arrears without taking on additional debt.
Real estate security does not need to be provided as collateral and once the facility has been established, funds are generally available within 24 hours of uploading the debtors ledger to the online portal.
There are no monthly reconciliations with Classic’s Debtor Finance facility and, as a confidential facility, it is not disclosed to your client’s customers.
Is Debtor Finance a solution for your client?
· In business for a minimum of 2 years
· Sells on credit terms to businesses
· Invoices are assignable, collectable and unconditional
· ATO debt is not an ongoing issue & there is a reasonable explanation for why the debt occurred
· Business is meeting all ATO payment plan obligations
· Operates in industries such as: Manufacturing, Wholesalers, Import & Distributors, Transport & Logistics, Labour Hire, Printing or Business Services
3. INTEGRATED FINANCE
An Integrated Finance solution may be a feasible solution where a client has some equipment to use for a 'Sale-back' but not sufficient to raise the entire amount required to settle the ATO debt, but the client qualifies for a Debtor Finance facility.
Combining a confidential debtor finance facility to release equity in the debtor ledger, whilst raising additional funds from available equipment through a sale-back facility is an effective way of raising required funds.
Is Integrated Finance a solution for your client?
· In business for a minimum of 2 years
· Sells on credit terms to businesses
· Invoices are assignable, collectable and unconditional
· ATO debt is not an ongoing issue & there is a reasonable explanation for why the debt occurred
· Business is meeting all ATO payment plan obligations
· Business owns assets but not enough to satisfy ATO debt
· Operates in industries such as: Manufacturing, Wholesalers, Import & Distributors, Transport & Logistics, Labour Hire, Printing or Business Services
An ATO debt is a business headache worth resolving before the Christmas shut down period, when cashflow pressure is often unforgiving. If your client needs an alternate funding solution, get in touch with the Classic Funding Group team on 1300 780 895 or
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