New research conducted by business payments provider Finstro of over 1200 small businesses across Australia in July has found that cashflow remains the biggest hurdle in the recovery of small business from the COVID-19 pandemic.
Finstro Chief Product Officer Tom Whitworth said that cashflow support was critical to empowering SMEs to continue to trade and grow and help steer Australia’s economic recovery in the long run.
“It’s no surprise cashflow is the highest priority for small businesses in the current environment,” Whitworth said. “Access to flexible finance facilities has arguably never been more important for SMEs looking to push through the challenges of operating through a pandemic.”
Whitworth said SMEs were facing a “payments crunch” as they tried to balance delayed customer payment and a reduced supplier trade terms.
“Suppliers, who are rightly concerned about securing payments in this challenging environment, are increasingly demanding shorter trade terms and, often, cash on delivery,” Whitworth said. “This makes it difficult for small businesses who are looking to order supplies and reinvigorate their businesses after a period of significantly reduced trade or shutdown.”
Despite the dispiriting findings, Finstro’s survey also highlighted the resilience of Australia’s small-business community, with 65 per cent of those surveyed remaining highly confident about their outlook. Victoria and WA respondents were noted as the most confident at 68 and 67 per cent, saying they are “highly confident”.
While the research was conducted prior to Victoria’s “second wave” COVID-19 crisis, Whitworth said it was inspiring to see SMEs maintaining such a positive outlook.
“Australian small business has a reputation for resilience and it’s inspiring to see this continuing in the face of such an extraordinary challenge,” Whitworth said. “Of those businesses surveyed who had closed as a result of COVID, 99 per cent said they had every intention of reopening – this reinforces the grit and fortitude which goes to the very heart of the SME community.”
