At a glance
- Payment disputes remain the most common issue facing small businesses.
- Accountants have an opportunity to evolve from compliance processors to strategic business partners.
- Tax incentives and small business impact assessments could improve SME policy.
The United Nations established MSME Day to raise awareness of small businesses’ contributions to sustainable development goals. In Australia, this means recognising 2.5 million enterprises that generate $500 billion in economic activity.
But behind the celebration lies a harsher reality: many business owners are drowning in compliance demands, struggling with cash flow crises, and desperately seeking help from professional advisors beyond traditional tax preparation.
The cash flow crisis
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Bruce Billson says payment disputes have become the most common issue facing his office. ASBFEO provided one-to-one assistance for a record 587 payment disputes in 2023-24.
“Payment disputes account for two in five requests for help, most commonly in the construction industry and increasingly in the hospitality and disability support industries. In many of the payment dispute cases, the business customer has told the small business supplier that they can’t afford to pay them. These disputes can put an unpaid small or family business with modest cash reserves in a precarious position,” he says.
Despite some optimism about moderating inflation and RBA rate cuts, the immediate pressures remain intense. MYOB’s latest Bi-Annual Business Monitor research shows 41% of SME owners cite cash flow as their leading cause of mental health struggles – a reminder that financial stress impacts more than the balance sheet.
Tax and business advisor Lawrence Petruzzelli sees this daily. “Revenue is vanity, but cash flow is survival. Rising wage costs and inflation are squeezing margins. Too many SMEs don’t understand their true cost per employee or per service,” he says.
These escalating pressures have changed what clients expect from their accountants.
Beyond the tax return
Petruzzelli says the profession has transformed in response to client needs.
“In today’s volatile environment, accountants are no longer just service providers. For Australian SMEs, we are strategic partners, risk managers, and growth advisors rolled into one.
Rising costs, compliance overload, and workforce pressures have created a new reality for business owners. Most don’t need more information. They need interpretation, clarity and decisive action, that’s where we come in,” he says.
CPA Coco Hou says the complexity is most acute in compliance, where regulatory changes create constant risk exposure.
“Updates such as STP Phase Two and the introduction of Director ID obligations have caused widespread confusion. Most business owners want to do the right thing but simply do not have the time or headspace to decipher the complexity,” she says.
Petruzzelli agrees, explaining many SMEs operate under outdated structures that expose them to risk without knowing.
The advisory scope now extends beyond traditional compliance into digital transformation, sustainability reporting and ethical business practices. If you’re still focused primarily on tax compliance, you may be missing opportunities to help clients navigate ESG requirements, technology adoption and ethical governance issues.
“SMEs that thrive in this market will be the ones who treat their accountant as a key player in their business, not just a tax mechanic,” Petruzzelli says.
Policy considerations
While accountants are adapting to support their clients, Billson says small and family businesses must stay front of mind for policymakers and regulators. “There is a pressing need to redress the deteriorating risk-reward balance confronting many small and family businesses,” he says.
Targeted tax incentives may be a practical starting point.
“We know that it is in the early years of a business…when they are most financially vulnerable, and the constraints of cash flow can impact business growth and sustainability. A tax discount or offset scheme, allowing new businesses to retain more of their initial earnings that would reward entrepreneurial risk taking and support reinvestment into the business,” Billson says.
He also advocates for making the instant asset write-off measures more generous, incentivising digitisation, and technology deployment and energy efficiency initiatives to support greater capital investment by SMEs in productivity-enhancing capability.
But many experts warn against unintentionally adding to compliance burdens. New workplace laws, modern slavery reporting requirements and climate-related financial disclosures risk creating more red tape for small suppliers.
“A simple improvement that governments at all levels across the country can make immediately is to require every submission to Cabinet to include a small business impact statement. This would mean every time a decision is made, small business will be front of mind and bright on the radar screen,” Billson says.
As MSME Day highlights small business contributions, perhaps the most pressing challenge is translating recognition into policy and advisory support these enterprises need to thrive.
