SMEs positive despite cash flow issues

Most SMEs are looking positively to the future despite one in two struggling with cash flow.

22 December 2021

New data released by Zip Business has suggested that most of Australia’s businesses are confident trading conditions are on the way up, with almost 70% expecting conditions will improve over the next six months.

The findings, which derive from a survey based on the Australian Bureau of Statistics' Small Business Index and the insights of 500 Australian small businesses over a week at the end of November, noted that 71% of respondents agreed in some capacity that trading conditions would improve in the next three to six months. 

The data also noted that 76% of respondents agreed that conditions would improve over the next 12 months, and 77% believed a boost would occur sometime within the next two years. 

However, while this research suggests a positive for the future, it also spelled concerns for the present, with 47% of respondents expressing they were planning to use some form of assistance to address cash flow issues over the next three to six months. 

Of these businesses, 17% noted that they planned to access savings, 10% planned to take out a loan from a bank, while 5% said they would access a buy now, pay later service for their business. 

However, of the 53% who noted they had no intention for assistance, 6% said they did not have a plan for how they would access funding or credit. 

The survey also reported that 66% embraced multiple sources of working capital to survive the pandemic, while 27% employed either savings or government grants, and that 24% entered credit card debt. 

More than half of the small businesses based in NSW and Victoria (55%) said they were either losing money or just breaking even over the past 12 months – a 20% increase in their cash flow position pre-pandemic. 

Speaking of the survey’s findings, Zip Business general manager Geof Alexander said: “Cash flow is a concern for businesses right now. At the height of the pandemic, some businesses flourished while others had to use their own savings, credit card debt, or access government grants. 

“Uneven performance like this makes accessing finance at a bank difficult because they struggle to understand the business’ true position. That’s why we chose to evaluate a business' performance based on pre-COVID levels. Assisting businesses in need is why we created Zip Business.”

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