Cash flow issues forcing SMEs to seek financial assistance

The new research has revealed that SMEs are seeking financial assistance to fund immediate needs such as wages or stock, but are unaware of some short-term, alternative financing methods available to them.

The survey of 1,000 Australian SMEs showed more than a third (39 per cent) have faced cash flow issues since March, with a further 48 per cent experiencing finance pressures in the six months prior. This has resulted in 28 per cent seeking financial assistance within the last year and a further 28 per cent planning to do so within the next 12 months.

And when applying for business finance, immediacy to cash was an important factor for almost a third of respondents (32 per cent).

“Businesses are currently facing really tough financial pressures due to rising costs across wages, energy and fuel and record high purchase costs,” said Steve Price, head of go-to-market financial services at MYOB.

“We’re looking at the highest quarterly wage increase in 10 years, with our recent research showing over half of Australian SMEs have increased salaries in the past year, while raising employee pay is a priority for four in five businesses.

“Adding to these pressures is the fact that small businesses often have to navigate late payments from customers which can really impact their cash flow. The upcoming holiday season is renowned for being the time of year SMEs face the slowest payment times on their invoices, so keeping a steady hand on cash flow is key to helping a business survive in this climate.”  

Almost three-quarters of businesses (74 per cent) surveyed for the MYOB Business Monitor in June said when they need cash, they need it straight away, and over half (54 per cent) noted by the time funding from a bank or financial institution is approved, their cash flow issues are already resolved.