Mastering the Maze: A guide to Special Situations Finance – Part 4 Overcoming Credit Challenges

Series Introduction

This is the fourth part of our series Mastering the Maze: A Guide to Special Situations Finance.  In this article, our focus shifts to a pressing issue many Australian SMEs face today: navigating the credit challenges that have arisen, particularly with the Australian Taxation Office (ATO) intensifying its tax arrears recovery efforts. Hermes Capital plays a critical role in providing solutions to these challenges.

The Changing Credit Landscape

The ATO’s return to vigorous collection activities post-COVID-19 has significantly impacted the credit landscape for SMEs. During the pandemic, leniency was common, with businesses advised to prioritize operational funding over tax payments. However, as normal collection activities resumed, businesses found themselves facing winding-up notices, bank account garnishes, and damaging credit reports. These actions not only jeopardize their relationship with trade suppliers but also narrow their access to traditional financing, leading in some cases to insolvency.

Hermes Capital’s Pragmatic Solutions

In this challenging environment, Hermes Capital stands as a beacon of hope. Our structure allows us to take a pragmatic approach to lending, providing timely, structured, and adequate financing solutions to businesses in distress. Unlike traditional lenders, our decision-making process is swift and based on the future potential of a business rather than its past financial troubles. This approach is especially vital for businesses that have been penalised in the wake of the ATO’s crackdown, offering them a pathway to recovery and growth.

Strategic Advice for SMEs

For SMEs grappling with cash flow and credit issues, our advice is straightforward: act early and seek expert advice. Early intervention opens up a wider range of options and solutions. Working with experienced advisors, whether experienced commercial finance brokers, accountants, or legal professionals, can provide the strategic guidance necessary to navigate through these challenges successfully.

What’s Next?

As we look to the future, Hermes Capital remains committed to supporting Australian SMEs through these turbulent times, offering innovative financing solutions that cater to the evolving needs of the market.

In our next and final post of this series, we will explore the future of financing with Hermes Capital, highlighting how we evaluate business potential and adapt to meet the changing financing needs of SMEs.