Victorian small and medium-sized enterprises (SMEs) are facing rising operating costs, inconsistent customer demand and increased red tape, which is pushing more small suppliers into cash-flow stress, according to an industry insider.
Earlypay CEO James Beeson said the cost of doing business in Victoria – the second most populous state in the country – is higher than in other Australian states, with businesses burdened by bigger state taxes, charges and compliance demands.
“Put bluntly, Victorian small businesses are doing it tough,” said Beeson.
“They’re dealing with higher costs across the board, unpredictable revenue and an ever-growing list of rules to comply with – often without the time or in-house resources larger companies take for granted.”
Beeson said the challenges are most acute for businesses with longer customer payment terms, seasonal trade or thin margins.
“Cash flow is the make-or-break. When payments arrive late or expenses rise suddenly, it doesn’t take much for a well-run SME to fall behind. That’s when stress levels spike because payroll, tax and supplier bills don’t wait,” he said.
“Beyond the stress, there’s also a real confidence hit at the moment, and it’s impacting even stable, well-run businesses.
“A lot are holding back on growth decisions like tendering for new work or adding headcount, purely because the timing and uncertainty feels harder to manage and less predictable.”
Beeson’s stance is supported by the Business Council of Australia’s recently released Regulation Rumble report, which identified Victoria as the least competitive jurisdiction for doing business and the one with the most room for improvement.
According to the third edition of the report, Victoria has some of the nation’s highest tax rates and regulatory requirements, making it the least attractive state in which to do business.
Accounting for nearly a quarter of the nation’s gross domestic product, Victoria’s poor performance has a significant impact on Australia’s global competitiveness.
On the flip side, South Australia came out on top for the third year running with the best regulatory and tax settings for doing business in Australia. It also ranks in the top three for property taxes/charges and business licensing.
“The success of Victoria matters, and practical reforms to payroll tax, property taxes and business licensing would deliver a big boost to the state’s ability to win investment,” said Business Council of Australia’s Chief Executive Bran Black.
On top of regulatory and tax challenges, many Victorian SMEs are crumbling under the weight of higher wages and input costs, rent and insurance increases, and persistent energy-bill pressures, according to Beeson.
Staff shortages, the complexity of workplace compliance and a spike in crime are also major pressure points that are proving especially difficult for businesses in the retail and hospitality sectors.
When pressed on what could reduce stress on Victorian SMEs, Beeson points to a practical policy focus that includes easing cost burdens, simplifying compliance and improving cash-flow resilience.
“We need a genuine business reset that includes targeted government assistance where it actually moves the needle, cutting red tape and sensible tax relief that rewards employment and investment,” he said.
“Government has a role to play in removing unnecessary pressure points, but many of the challenges facing SMEs today come down to timing.
“When costs arise faster than revenue is received, even well-run businesses need to manage gaps between income and obligations. That timing risk doesn’t disappear through policy alone.”
How can you help your small Victorian suppliers? Beeson suggests improved payment practices by large organisations could help to reduce uncertainty for smaller suppliers.
