SME cashflow still a huge issue, says report

by Mike Wood09 Jun 2021

72.5% of SMEs are struggling as a result of cashflow issues, according to the latest ScotPac SME Growth Index.

Three of four small businesses reported having cashflow issues, though the other quarter who said that they had not had problems is actually larger than in the 2018 and 2019 editions of the report.

ScotPac’s SME Growth Index is one of the most comprehensive studies of the small business landscape in Australia, and offers in depth insight into the SME sector.

Cashflow is a major issue for SMEs and the brokers that deal with them: in particular, commercial and asset brokers are often at the coalface of cashflow issues, helping businesses to get quick and easy access to financing to tide them over through difficult times or to help them take advantage of deals.

SMEs are often in vital need of cashflow solutions, with stock-buying, invoicing and seasonality often major factors in the lifecycle of a business – not to mention the ongoing issues that many have endured during the COVID-10 pandemic, floods and bushfires.

“There are two key issues from this research that are of note for brokers,” said ScotPac CEO Jon Sutton. “The first is the issue of businesses holding on to cash.”

“Brokers can be having conversations with their clients on the importance of investing in their businesses. It’s the businesses investing in their growth who will have a competitive advantage over businesses who might be too conservative and are sitting on the fence in the current environment.”

“The second is the issue of how brokers can help their clients develop funding strategies that help to manage working capital.”

“The research shows the massive burden for businesses in waiting for invoices to be paid, yet not all businesses in this position are utilising funding options such as invoice finance that alleviate the waiting and give businesses an upfront cashflow boost.”