As the 2025 financial year unfolds, Australian small and mid-sized businesses are facing conditions that are more complex and in many ways, more demanding, than we’ve seen in years.
Inflation may be slowing, but costs haven’t. Consumer spending is softening. Regulatory pressure is intensifying. And cash flow? For many businesses, it’s become the tightrope they walk every month.
But FY25 isn’t just about challenges. It’s also about decisions. The kind of decisions that will shape the stability and growth potential of your business over the next 12 to 24 months.
In this post, we’re breaking down:
- The core challenges businesses are facing right now
- The alternatives and strategies available to respond intelligently
- Where Blackwattle Tax can help you navigate it all with clarity, confidence, and control.
1. Challenge: Labour Shortages and Rising Wage Pressures
Ask any business owner across construction, retail, hospitality, or professional services and you’ll hear a common thread: “We can’t hire fast enough or afford to.”
Staffing continues to be a key constraint in FY25. While unemployment is relatively low, the real issue is labour availability in skilled roles. At the same time, wages have increased due to both Fair Work updates and superannuation changes:
- Minimum wage: Now $23.23/hour
- Super guarantee: Increased to 11%
For small to medium businesses, this has a double effect:
- Margins are squeezed by rising payroll costs
- Operational delivery is delayed due to understaffing
If your labour strategy still relies on 2022 cost models, you’re likely feeling the impact already.
What You Can Do Instead
Rather than purely increasing spend on recruitment, consider:
- Streamlining workflows through technology
- Reallocating budget toward automation where roles are hard to fill
- Outsourcing non-core finance roles, such as your CFO function, to a partner like Blackwattle Tax, where strategic financial management doesn’t come with full-time headcount costs
2. Challenge: Cash Flow Pressure from Payment Delays
In a tightening economic cycle, customers are slower to pay and lenders are slower to approve. This creates a classic cash flow crunch:
- Your costs are due now
- Your revenue is still 30–60 days away
According to recent small business surveys, over 30% of SMEs are anticipating payment collection issues in FY25. Worse still, many of them have no formal credit policy or debt collection process in place.
What You Can Do Instead
Now is the time to
- Run a 12-month rolling cash flow forecast
- Adjust payment terms where possible
- Implement automated invoice reminders
- Consider non-bank funding options for short-term cash needs
We integrate financial forecasting and creditor planning directly into our Virtual CFO service ensuring you’re not left scrambling each month for working capital.
3. Challenge: ATO Scrutiny Is Increasing (And It’s Not Subtle)
The ATO has made its position clear: compliance is a priority, and enforcement is getting more aggressive.
In FY25:
- Businesses with late BAS lodgements are being moved from quarterly to monthly GST reporting
- Interest on overdue tax debts is no longer tax deductible from July 1
- Director penalty notices are being issued faster than ever
This means compliance isn’t just about avoiding penalties, it’s about maintaining operational flexibility. If your tax lodgements fall behind, or your communication with the ATO stalls, you could face account locks, interest charges (at 11.17%), and personal liability for tax debts.
What You Can Do Instead
- Lodge early even if you can’t pay in full
- Set up formal ATO payment arrangements before defaults occur
- Work with a registered agent like Blackwattle Tax who can manage negotiations, communications, and lodgements on your behalf
If your current accountant only checks in at year-end, you’re vulnerable. Ongoing compliance support should now be part of your core financial strategy.
4. Challenge: Business Growth Is Slowing and Markets Are Changing
Economic data for early FY25 shows clear signs of softening consumer spending, particularly across discretionary retail, home improvement, and non-essential services. In addition, changes to immigration policy and reduced population growth are subtly reshaping demand in several sectors.
For businesses that relied heavily on high-growth strategies over the past two years, this can lead to:
- Overexposure to one market
- Underperformance in new channels
- Fixed costs that no longer match revenue patterns
What You Can Do Instead
Start by rebalancing. A few ways we help clients adjust:
- Diversify your revenue streams (digital, export, product expansion)
- Access available government grants, like the R&D Tax Incentive or the Export Market Development Grant (EMDG)
- Restructure business units based on real-time profitability, not outdated forecasts
Sometimes the smartest growth plan is a sharper focus not just more spend.
5. Challenge: Business Lending Has Tightened—And Will Stay That Way
In FY25, banks have continued to apply stricter lending criteria, particularly for unsecured credit, lines of capital, and cash flow loans. For many business owners, this has made funding expansion, covering tax debts, or bridging slow quarters even more difficult.
What You Can Do Instead
The lending market isn’t closed, but you need to be prepared:
- Ensure your financials are clean, current, and reconciled
- Work with an advisor who can present your business case professionally
- Explore non-bank lenders who offer quicker approvals and more flexible structures
At Blackwattle Tax, we often support clients with:
- Loan application packages
- Bank and capital structuring
- CFO advisory for investor-readiness
Access to finance is about more than credit scores. It’s about the story your numbers tell.
Final Thought: Strategy Is Your Best Defence in FY25
Every business in 2025 is facing tighter margins, higher compliance risk, and more competition. What separates those who thrive from those who stall isn’t luck, it’s preparation.
And that doesn’t mean doing more. It means doing what matters, smarter.
At Blackwattle Tax, we help mid-sized, innovative businesses cut through the noise and build forward-focused financial strategies. Whether you need compliance support, a CFO who understands your industry, or clarity on funding and forecasting, we’re ready to help.
Book your free 30-minute strategy session now and let’s build a plan for the year ahead that gives your business not just protection, but momentum.
Schedule a FREE 30-minute consultation today to discover how we can help you make strategic decisions and streamline your business operations.
Stay informed and empowered by subscribing to our monthly newsletter, where you’ll receive valuable insights on business advice, investment tips, and strategic tax planning.
Disclaimer: We endeavour to make sure the information provided in this guidance is up to date and accurate. Please note, that the information is only intended to be a guide, with a general overview of information. This guidance is not a comprehensive document and should not be interpreted as legal advice or tax advice. The information is general in nature. You should seek the assistance of a professional opinion for any legal and tax issues related to your personal circumstances.
The amount of the FTL penalty depends on the size of the entity and the duration since the lodgement due date:
- Small Entities: One penalty unit for each 28-day period (or part thereof) that the return or statement is overdue, up to a maximum of five penalty units. As of 1 July 2023, one penalty unit is $313.
- Medium Entities: The penalty unit is multiplied by 2.
- Large Entities: The penalty unit is multiplied by 5.
- Significant Global Entities: The base penalty amount is multiplied by 500
