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Debt levels bite into cashflows

WITH WA’s economic downturn continuing and the GST biting cashflows, small businesses’ debt management is becoming more crucial.

WA’s retail figures were again weak. The two traditional economic barometers – construct-ion and new motor vehicle sales – are both looking sickly and demand is starting to rise

for insolvency practitioners’

services.

WA Small Business and Enterprise Association executive director, Philip Achurch, said the tough economic times made it more important than ever for small business owners to keep an eye on their debt levels.

“Small businesses are traditionally lower down in the pecking order when it comes to getting paid,” Mr Achurch said.

“In the past six to nine months the extension of payments time has become a big problem, exactly as it was in the mid-1990s and the late 1980s.

“A small business just needs one big payment or a slew of small payments to extend and that business can be in trouble.”

Small Business Development Corporation managing director, George Etrelezis, said the introduction of the GST had brought about fundamental changes in the way cashflows were managed.

“Positive steps small business operators can take include developing a cash flow management plan to forecast monthly cash receipts and payments and indicate funds available at any given time during the financial year,” he said.

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