ATO Debts and Trade Defaults: Cash Flow Warning Signs for Clinics

Accountants Daily reported this week that trade payment defaults and ATO debts are key signs of insolvency risk, based on CreditorWatch data.

That may sound like big business news.

But the warning signs can show up in a physio clinic too.

They often start small.

The first sign is usually timing

Cash flow problems do not always mean the clinic has no bookings.

A clinic can be busy and still feel tight.

The warning signs may be:

• supplier bills paid later than usual
• BAS payments pushed back
• super payments delayed
• PAYG withholding not set aside
• rent paid close to the due date
• loan payments covered from next week income
• owners taking less pay without a plan

One late bill may not be a crisis. A pattern is different.

Do not use the ATO as a bank

It can be tempting to delay tax payments when cash is tight.

But ATO debt can grow fast. It can also hide the real problem.

If the clinic cannot pay BAS, PAYG, or super on time, the issue is not just tax. It may be pricing, wages, rent, debt, or weak billing systems.

You need to see the whole picture.

Check supplier bills

Physio clinics have many regular costs.

These may include:

• rent
• laundry
• clinical supplies
• software
• insurance
• equipment finance
• cleaning
• merchant fees
• contractors

If these bills are being paid later each month, take it seriously.

Late supplier payments can be an early warning that the clinic is running too close to the edge.

Build a 13-week cash view

You do not need a complex forecast.

Start with 13 weeks.

List the cash coming in and the cash going out. Include wages, super, rent, BAS, loan payments, and supplier bills.

Then look for the tight weeks before they arrive.

This gives you time to act.

What to do this week

Print or export your aged payables report.

Then check:

1. Who is overdue?
2. Which ATO amounts are unpaid?
3. Which super amounts are unpaid?
4. What large bills are due in the next month?
5. Is there a plan to clear them?

If you cannot answer these questions, do not wait.

A busy diary does not always mean a safe business. Clean cash flow records give you more control.

Source: Accountants Daily, “Trade payment defaults, ATO debts key indicators of insolvency: CreditorWatch”.