Supply chain problems continue to plague SMEs

Two-thirds of businesses lift prices to cope, report reveals

Supply chain problems continue to plague SMEs


By Jayden Fennell

A new survey by SME lender ScotPac has found 100% of Australian SMEs have been hit by supply chain disruptions and, as a result, two in three are increasing their prices.

ScotPac’s SME Growth Index Report shows that three out of four SMEs reported their cost base expanded in the six months to September 2022 by an average of 15% due to inflation and other input cost rises. Almost two-thirds of SMEs increased pricing for their products and services by an average of 14.5%, while one in three said they were absorbing rising costs.

Interestingly, 5% of SMEs lowered their prices in a bid to stand out from their competitors.

ScotPac CEO Jon Sutton (pictured above) said 718 SMEs engaged in the latest round of the SME Growth Index Report.

“Larger SMEs ($5 million to $20 million in revenue) told us they experienced average production and other input cost rises of 20%, compared to 12% for smaller SMEs ($1 million to under $5 million in revenue) and larger SMEs increased the price of their goods and services by an average of 18%, compared to an average increase of just 1.5% for smaller SMEs,” Sutton said.

“The key areas of advice SMEs felt they needed to better navigate supply chain disruptions included alternate business funding tools such as invoice finance (25%), general risk advice and guidance (20%) and new supplier network referrals (16%).”

There were many sectors represented in the survey. These included manufacturing (14.5%), business services (14.1%), retail (11.4%), wholesale (11.0%), personal/other services (10.6%), construction (9.6%) and 28.8% all other industries including transport, mining, agriculture, media, accommodation, finance (non-bank) and electricity.

Sutton said despite the easing of COVID-19 restrictions in 2022 and more SMEs forecasting positive revenue growth in the months ahead, severe pockets of supply chain disruption were still being felt by SMEs.

“Supply chain disruptions affect a huge range of the goods and services we rely on every day and the businesses that supply them,” he said.

“Anyone who has tried to buy a new car in the past two years will have first-hand experience. Earlier this month, we have seen reports of pallet shortages that could impact the delivery of food, groceries and medicines to supermarkets and pharmacies across the country, which again will affect the cost of doing business.”

Sutton said a lot of business owners ScotPac worked with were looking to invest in making their supply chains more resilient by purchasing reserve inventory, building or leasing warehouse space, sourcing additional suppliers or adding digital solutions.

“ScotPac has the breadth of products and experience to help more businesses invest in their supply chain than any other non-bank lender, however, we know that many SMEs are not sure how to fund purchases or upgrades,” he said.

“That is why we encourage SMEs to talk to their advisors about releasing working capital through options like invoice or asset finance, because you may have more solutions available than you realise.”

In November, ScotPac launched a new Partner Portal, delivering brokers digital tools to help them quickly find the right solutions for their clients.

ScotPac group executive, client acquisition and asset finance Craig Michie said the Partner Portal was developed in response to a clear gap in the market for a time-saving digital platform for brokers.

“Broking has become more sophisticated, competitive and reliant on digital trends in recent years and the aim of the Partner Portal is to help brokers achieve more in less time,” Michie said.

“The portal allows brokers to quickly navigate loan products and secure fast finance for clients. This includes our easy new instant asset finance approvals, which have contributed to 300% growth in digital applications in the past six months.”

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