If you run a small business in WA, chances are you’re feeling the pressure right now. A report from CreditorWatch revealed that 7.5% of food and beverage services businesses are expected to fail within a short period. That’s the highest insolvency risk across all sectors. And while hospitality leads the list, it’s far from the only one in trouble.

Administrative services, arts and recreation, construction, and transport are also facing elevated risk, with over 5% of SMEs in each of these sectors projected to go under.

Why So Many Businesses Are Struggling

Rising costs, tighter consumer spending, and ongoing labour shortages are hitting businesses hard, especially those operating on already thin margins.

For hospitality venues, it’s a triple threat:

• Customers are spending less as interest rates bite.
• Operating costs are soaring (ingredients, electricity, staff).
• Wage demands remain high due to skill shortages.

And that’s before you factor in the mounting pressure from the Australian Tax Office (ATO).

The ATO Has Stepped Up Its Debt Collection Game

According to the Corporate Insolvency Index, insolvency appointments jumped 39% nationally in FY24, and a big reason is that the ATO is no longer taking a backseat.

It’s actively chasing $35 billion in unpaid small business taxes. And its message is clear: if you’re not engaging with the ATO about your debts, they’ll escalate matters fast.

Actions the ATO may take include:

• Garnishee notices: Redirecting payments from your clients or bank to cover your debt.
• Director Penalty Notices: Making directors personally liable for unpaid PAYG, GST or super.
• Credit reporting: Informing credit bureaus of your tax debts, damaging your creditworthiness.
• Legal action: Issuing statutory demands or applying to wind up your business.

What You Can Do Right Now

If you’re behind on your tax payments or finding it hard to stay afloat, don’t wait for a knock on the door. There are smart, proactive steps you can take.

Get on the Front Foot:

• Review your current cash flow and tax position.
• Ring-fence your GST, PAYG, and super into a separate account so it’s always ready.
• Use cloud tools that show real-time tax obligations (and avoid nasty surprises).
• Engage a trusted bookkeeper or adviser to help you stay compliant.

If you’re already in trouble:

• Reach out to the ATO early and honestly. They’re more flexible with those who engage.
• Apply for a payment plan via the ATO online portal (for debts under $200,000).
• Speak to a broker or financial adviser about cash flow facilities that can give you breathing room.

How Finance Can Help You Survive and Stabilise

In tough conditions, cash flow is essential. At Peel Finance Brokers, we’ve seen firsthand how the right finance solution at the right time can help businesses survive ATO debt, protect staff jobs, and even restructure for a stronger future. Some of the following solutions can be considered.

• Invoice finance: Unlocks cash tied up in unpaid invoices.
• Short-term business loans: Fast access to capital for urgent needs or ATO repayment plans.
• Debt consolidation or restructuring: Simplifies obligations so you can focus on rebuilding.

These aren’t one-size-fits-all solutions. They require the right partner who understands your business and has access to a broad lender network, and that’s what we do best.

A Word of Advice From the Experts

“We’re seeing more directors taking early action to save their businesses,” says Gareth Gammon from Insolvency Australia. “It’s a far better outcome than waiting for wind-up proceedings.”

ScotPac CEO Jon Sutton agrees:

“Businesses that seek professional financial guidance when dealing with ATO debt are best placed to recover. With the right support, cash flow challenges can be managed — even in a high-cost environment.”

If the ATO is breathing down your neck, or your business is sitting in one of the high-risk sectors, don’t wait until it’s too late. Peel Finance Brokers can help you assess your position, explore practical finance options, and give you a clearer path forward. Contact us today for a confidential chat.

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