Report Shows Surge in Payment Disputes from Struggling Businesses

The Australian Small Business and Family Enterprise Ombudsman (ABSFEO) has reported a significant increase in requests for assistance from business owners dealing with payment disputes and fears of insolvency. With over 6254 requests for assistance from the Ombudsman in 2023-24, up 10 per cent from the previous year, there are growing concerns from businesses either owed money by potentially insolvent companies or facing challenges in meeting their own financial obligations. 

Billson pointed out that payment disputes are often an early warning sign of broader cash flow issues, which can trigger a ripple effect across industries. "Cash flow is the oxygen of enterprise, but difficult conditions mean when one party is late in paying, it can cascade through the supply chain," he explained.

In the 2023-24 financial year, payment disputes accounted for 42% of all requests for assistance from ASBFEO. The surge in requests reflects growing unease among small businesses amid tough economic conditions, including rising costs and increased enforcement actions by the Australian Tax Office.

Billson noted that households' cost-of-living pressures are mirrored in the rising cost of doing business. He cited key challenges such as increasing wages, energy prices, insurance premiums, and rent. Recent surveys indicate that nearly a quarter of small businesses need more cash reserves, with 18% holding less than a month's cash to cover their obligations.

Small and family businesses with a dispute can find more information and guidance on the ASBFEO website—asbfeo.gov.au—which also includes resources, checklists, tools, and additional information about the Tax Concierge Service and the Quarterly Report.

For more information about the Australian Small Business and Family Enterprise Ombudsman