Eighty per cent of small businesses in Australia had trouble with their cash flow last year, a report in Australian Banking and Finance said, adding that the next 12 months will allow these small businesses to see how difficult it is to find cash flow sources.
The same report quoted the new bi-annual business sentiment survey by Bibby Financial Services, which stated that 81 per cent of small- and medium-sized enterprises (SMEs) had these problems last year. Of this, 47 per cent believe their situation with regard to their cash flow even worsened this year.
According to another report in News.com.au, it is being delayed because small and medium banks are not receiving payment invoices from their customers on time. On the other hand, 42 per cent of SMEs have to wait for a longer time this year than 12 months ago to get paid.
The survey showed that 34 per cent of the 200 respondents have outstanding invoices that are overdue for many months. Some 25 per cent of the businesses settled for installments after customers negotiated with them while 21 per cent decided to pay their bills faster since suppliers have stricter trade terms.
Cash Flow Remains to be the Problem
Mark Cleaver, Bibby Financial Services managing director in ANZ, noted that problems in cash flow remain to be the biggest boon to the expansion of small and medium enterprises in Australia. In fact, 74 per cent of SMEs is believed to use their personal finances in the coming months because they need to address their cash flow issues.
Aside from using their own finances, the Australian Banking and Finance reported that SMEs can also increase their overdraft or delay their payment to their suppliers. It also said that SMEs need to submit a forecast for the coming fiscal year.
The same survey noted that 71 per cent of SMEs have business finance while 33 per cent are secured to real estate.
Of the number of SMEs that are currently having cash flow problems, 65 per cent would probably take a business loan from non-bank lender, the report in News.com.au emphasized. This figure consists of the 7 per cent that are already indebted to non-bank lenders. These banks are most likely to use these lenders because of trust and cost.
The survey was conducted from July 15 to July 23 on businesses with 5 to 19 employees.