Welcome to our latest State of The SME Space. These 
last few months have been an exciting time at FactorONE with some key positive changes.
Firstly, it is with pleasure that I announce that we have hired three new Client Relationship Managers; Gerry Ferguson, Jennifer Bradshaw and Michaela Novak. All are very experienced factoring managers with strong management and customer relations skills. They are committed to delivering first class service and ensuring that we are always here for our clients.
We have also commenced the process of decentralising the management of our clients. The first step in this regard was Michaela joining our Sydney office where she is managing a portfolio of NSW-based clients. The plan is to have CRMs on the ground in Victoria in July and WA in the second half of the year. By having staff on the ground we will be able to increase the quality of our client engagement and show our commitment to ensuring excellent client service.
ATO Clamping Down
I recently reported in a FactorONE article in Accountants Daily that the ATO had ramped up its strategy of using its right to Garnishee debts as a means of reducing the growing tax debt. This activity has unfortunately weighed most heavily on SMEs. As SMEs are the true powerhouse of our economy this is truly regrettable.
The garnishee activity has apparently not had the desired effect as the ATO plans to become much more aggressive in its effort to reduce the growing tax debt, up 10% to $20B compared to last year. According to the ATO they are reinventing themselves and this will involve a much more aggressive stance at a time when Australia is only recording moderate growth. Apparently, the ATO will now commence recovery proceedings against businesses with $90K in debt whereas the previous figure was $340K.
With unemployment at record levels and low commodity prices it seems an odd time to clamp down on business tax debt. With low inflation, low interest rates and the US economy growing, it seems more an opportunity to try and grow our own economy rather than restrict it. This opportunity is strengthened by lower fuel prices. By growing the economy businesses will be much more able to resolve tax debt.
At FactorONE we fully back SMEs. We understand that we live in the real world and that cashflow pressure often reduces an SME’s ability to take advantage of new, lucrative opportunities. That’s why our facilities are tailored to the needs of the client, providing peace-of-mind and the chance to grow.
The Wider Economy
In my last newsletter I mentioned that the RBA expected an uptick in consumer demand. This does indeed appear to be happening with consumer growth in the last quarter being much higher than past years. The anticipated growth was off the back of cheap credit and rising house prices. This should feed into greater business investment, in turn generating more jobs.
The so called “invisible hand” of the markets may have also contributed with the decline in the dollar helping our exporters. During our commodity boom our dollar soared in line with the high price paid for our commodities. Our local tourism market should also benefit with more locals choosing to stay at home as overseas markets become relatively more expensive and our country becomes a more affordable destination.
This, of course, begs the question “where will our future growth come from?” Low interest rates and increasing property prices are not going to provide sustained growth and are obviously contributing to an asset price bubble that may soon burst.
According to the RBA our economy is operating well below its capacity. With consumer demand growing more jobs should be created, leading to further growth. This increased output should lead to an increase in exports supported by our lower dollar.
As our economy evolves away from manufacturing we do need to develop new industries. Technology is an obvious choice.
Technological advancements are another means of increasing productivity and have certainly played a key role in productivity gains in recent years. Unfortunately Australia has a poor culture for growing a vibrant tech scene. Unlike in the States, there is little support for raw ideas that are still in the incubator stage. Most successful tech start-ups get the basics right, put their product in the market, and then fine tune it. There is little support for this approach in Australia with funders expecting all the bugs to be worked out before any support is provided. This has led some commentators to call for legislative change and budgetary support to create a much more vibrant tech scene.
At FactorONE we support start-ups through to established businesses and businesses in turnaround. At FactorONE we are always open for business.
