Victorian small and medium-sized businesses are confronting a mounting mix of rising operating costs, patchy consumer demand and growing compliance burdens. These pressures are squeezing margins and pushing more operators into cashflow stress, according to specialist working capital provider Earlypay.
Earlypay CEO James Beeson said the cost of doing business in Victoria is also increasingly standing out versus other states, with higher state taxes, charges and compliance demands adding to the burden.
“Put bluntly, Victorian small businesses are doing it tough,” Mr Beeson said.
This is backed up by the Business Council of Australia’s Regulation Rumble report released late last year which highlighted Victoria as the least competitive jurisdiction in which to do business and has the most room for improvement.
According to the report, this is due to regulatory and tax handbrakes that are holding back the state economy.
Regulation Rumble ranks states and territories based on planning systems, payroll taxes, property taxes and charges, retail trading hours, workers’ compensation premiums, duties on insurance and licences and requirements to do business.
Business Council Chief Executive Bran Black said while South Australia came out on top as the best state to do business, Victoria continues to have the most work to do, with some of the nation’s highest tax rates and regulatory requirements making it the least attractive state in which to do business.
“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,” Mr Black said.
On top of the regulatory and tax handbrakes, many Victorian SMEs are juggling higher wages and input costs, rent and insurance increases, and persistent energy-bill pressures. Moreover, customers remain value-conscious, and spending decisions are increasingly delayed.
Earlypay CEO James Beeson said the challenges are most acute for businesses with longer customer payment terms, seasonal trade, or thin margins, where even a slight change in cash timing can have an outsized impact.
“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.”
“Cashflow 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,” Mr Beeson 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.”
Other major pressure points in Victoria include staff shortages and managing the complexity of workplace compliance, as well as rising energy costs and a spike in crime, which is proving challenging for parts of the retail and hospitality sector.
Mr Beeson said reducing stress on Victorian SMEs requires a practical policy focus: 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,” he said.
“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.”
Mr Beeson also said improving payment practices by large organisations would help reduce uncertainty for smaller suppliers, but access to flexible working capital remains critical for businesses operating on longer payment terms or seasonal cycles.
Earlypay said SMEs can act now by reviewing payment cycles, stress-testing funding needs under different trading scenarios, and ensuring appropriate working capital structures are in place before pressure builds.
About us:
ABOUT EARLYPAY
Earlypay Limited is an ASX listed (ASX: EPY) provider of Business Finance that has experienced year-on-year growth since inception in 2001. With a trusted legacy in supporting Australian small to medium sized businesses, Earlypay leads the way in delivering reliable working capital finance solutions and tailoring finance solutions to optimise cash flow — helping Aussie companies thrive with the cash flow they need to grow, every step of the way. Whether they’re just starting, sustaining, or scaling up, Earlypay delivers Aussie businesses flexible, user-friendly credit solutions they can count on. From humble beginnings, Earlypay has grown to have around 100 business finance professionals around Australia servicing a wide range of industries.
Contact details:
Mark Eggleton
New Romans
0430 095 111
