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Small Business Policies Proposed By Labor Government

Labor has made announcements about policies designed to help small business owners, but there is not much detail set in stone at this point. This is to be expected though, as Labor has a vision that will require the Treasury’s assistance to get right.

An announcement has been made regarding a plan that aims for small businesses to be paid on time. Labor wishes to ensure that small businesses are paid within 30 days, which while a welcome announcement for those that are constantly chasing money, is yet to have any concrete information.

More detail is required here in what they mean by this approach, however. You cannot simply legislate that someone has to pay you in 30 days if they are without the means to do so. If it is to do with government departments and needing to pay within 30 days, this may also be a welcome approach.

Mr Albanese has also announced that there will be a reduction in small business transaction costs at the point of payment, with a clear timeline for implementing least cost routing or similar. Least Cost Routing simply means that when a customer pays you with their debit card, they will not get to choose where it is Visa Debit or EFTPOS, but will automatically process through the least cost vehicle.

This could have major savings for small businesses that process a high number of small value transactions using EFTPOS or Visa/Mastercard Debit. It should also be noted that the Reserve Bank is already working on this problem and that you can already talk to your merchant provider about switching to Least Cost Routing.

Labor also has a policy about a beneficial ownership register for companies.  Now if you own shares in trust for someone else, you do not need to disclose anywhere who that “someone else” is.  The banks will need to know when identifying their client, but the public has no way of knowing.  Labor has mentioned that they will bring in a register of beneficial ownership so that people can search for the real owner of a company

There are also multiple other announcements that have been announced at the election by both parties that promised other items, but only time will tell if any changes will be made on that end.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts. 

Before you sign up, keep in mind: 

  • It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
  • You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
  • Keeping track of your payments can be tricky if you’ve signed up for multiple services.
  • It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
  • Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
  • Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

If you are someone who could make use of BNPL services, you may wish to:

  • Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later. 
  • Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
  • Always budget for bills, loan payments and BNPL payments, and 
  • Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.

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John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier