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Further research has identified challenges for Australia’s SME community, with eight out of 10 business owners reporting having cash-flow issues in the past 12 months.
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8 in 10 SMEs report increased cash-flow issues
19 October 2021
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According to ScotPac’s SME Growth Index, released on Monday (18 October), some 78.2 per cent of the 1,255 small businesses surveyed reported having cash-flow issues in the past 12 months, with many having to take on control strategies outside their norm.
Further, the research showed 42.8 per cent of respondents closed an office or shopfront in the past 12 months, moved premises or negotiated rent reductions.
Four in 10 respondents were found to have had restructured their business over the past 12 months, with the main benefit touted as keeping the business viable. Other key benefits include boosting cash flow (22.8 per cent), cutting costs and reducing overheads to boost the bottom line (15.8 per cent), retiring debt (12 per cent) and improving productivity (11.2 per cent).
“Since 2014 our research has tracked SME strategies for easing cashflow and this is the first time the top strategy has been closing, moving or seeking rent reductions,” said ScotPac chief executive Jon Sutton, commenting off the back of the results.
“The next most popular response was that more than four in 10 SMEs introduced new finance to improve cashflow. Flowing from this, we see the number of businesses using invoice finance to smooth out peaks and troughs has doubled in the past three years.
“The third most common cashflow strategy was to negotiate better payment terms – three in 10 businesses reported trying this.”
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Mr Sutton noted only one in five SMEs reported having no cash-flow issues over the past 12 months, with this proportion “higher than usual, perhaps due to state and federal government pandemic support provided”.
“It will be interesting to track the small business sector’s cashflow issues into 2022 to see if the end of government support packages and a potential return to ‘business as usual’ sees SMEs reverting to their usual higher level of concern about cashflow,” he concluded.
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