In Australia, the end of financial year (EOFY) on June 30 marks a pivotal time for businesses to finalise their financial records and lodge tax returns. It also provides companies with a valuable opportunity to assess their financial health over the past year. Businesses seeking debt collection also use this period to review outstanding invoices and make decisions regarding the management or referral of aged debts.

Late payments are a significant challenge. In 2021, nearly half (48%) of invoices issued by Australian small and medium enterprises (SMEs) were paid late, with 10% overdue by more than a month. When these aged debts are left unattended, they may limit the business’s ability to invest in growth and operations. As the EOFY approaches, small businesses have a timely opportunity to engage professional debt collection services for their aged receivables and enter the new financial year with clarity and confidence.

The Strategic Advantage of Referring Aged Debts at EOFY

While debts can be escalated at any date of the tax time, doing so before 30 June offers unique advantages across cash flow, compliance, and recoverability.

• Boosting Cash Flow and Financial Health

Many businesses may feel the pressure to present accurate and reliable financial statements as EOFY nears. Referring aged debts for collection around this time is one of the most effective ways to turn past due invoices into cash. These could be used to cover day-to-day expenses, pay staff, or reinvest in the business.

A stronger cash position at the close of the fiscal year can also improve how the business is viewed by banks, investors, and suppliers. When financial reports show fewer outstanding debts and a healthier cash balance, it boosts credibility and can make it easier to secure crucial funding or negotiate better terms for the new financial year.

• Claiming Tax Benefits and Write-Off Opportunities

With EOFY being the key deadline for lodging tax returns, it is also the ideal time to take a good look at which debts are genuinely unrecoverable. If a debt cannot be collected despite reasonable efforts, it may be eligible to be written off as bad debt.

The Australian Taxation Office (ATO) allows businesses to claim these as deductions, provided they’ve taken the right steps to recover them. This means businesses aren’t stuck paying tax on income they’re unlikely to ever receive, helping to reduce overall tax liability. Engaging commission-only debt collectors is ideal for this, as businesses receive the proper documentation they need to back up their claim if the debt ends up being written off.

• Starting the New Year with a Clean Slate

Clearing out aged debts at EOFY helps businesses get a clearer view of where they really stand financially. It is much easier to set realistic budgets and forecasts when the numbers reflect what’s actually collectible—not just figures on paper. With those old, doubtful accounts off the books, a business owner can plan ahead with confidence and make better decisions about spending, investments, or scaling back.

Starting the new fiscal year with a clean slate also means less time and energy spent chasing up debts that are unlikely to be paid. That fresh start provides clarity on a company’s financial position while lifting morale and setting a more positive tone for the months ahead.

The Benefits of Outsourcing Debt Recovery at EOFY

Outsourcing debt collection is a strategic move that aligns with EOFY objectives. By engaging a professional collection agency during this critical period, businesses can address long-overdue debts while maintaining focus on critical year-end tasks.

• Reclaiming Dormant Revenue at the Right Time

As EOFY approaches, businesses often identify large unpaid accounts receivable that have remained unaddressed for months. The best debt collection agency can breathe new life into these accounts, using tested systems to contact and recover payments, even from unresponsive debtors.

By outsourcing now, organisations avoid carrying these aged debts into another fiscal year and give themselves a stronger financial start on day one of the new fiscal year.

• Freeing Staff to Focus on Core EOFY Duties

Rather than tasking staff with chasing overdue clients during one of the busiest months of the financial year, outsourcing enables employees to focus on important EOFY Australia tasks such as creating debt reports, ensuring compliance, and refining strategy. This approach is particularly useful for private education providers and registered training organisations (RTOs), where lean administrative teams must manage enrolments, audits, funding applications, and financial duties simultaneously.

• Supporting Tax Planning and Bad Debt Deductions

In some cases, unrecovered debts may need to be written off. To claim these as deductions, the ATO requires that genuine recovery efforts be made within the same financial year. Partnering with a third-party collection agency provides that formal recovery attempt, along with supporting documentation. Whether the result is payment or tax-deductible bad debts, outsourcing the ageing accounts receivable at EOFY ensures that nothing is left unresolved heading into the new fiscal year.

Start the New Financial Year on the Right Foot with Bluechip Collections

Too often, aged debts sit untouched until they’re too old to recover. EOFY is a rare opportunity to take stock and take action. Bluechip Collections has helped countless Australian businesses recover dormant and overdue receivables. With a strong track record across various industries and a tailored approach to each case, we can make your debt recovery process straightforward and stress-free.

June 30 is right around the corner. Reach out through our contact form today to find out what can still be recovered before the new financial year begins. It could make all the difference to your bottom line.