New research from global financial technology platform Intuit QuickBooks reveals that Australian SMEs face a potential $22 billion shortfall by 25 December because of unpaid invoices.
The research found that SMEs are expecting an average of eight invoices to go unpaid between now and Christmas Day, with 23 per cent of them having shared that the pressure of unpaid invoices has been worse than ever this year.
And with Australian businesses generally shutting down over the holiday period into mid-January, this expected lack of cashflow is putting extra pressure on Australian SMEs at a time when cost-of-living pressures are already biting.
Financial strain is already affecting 46 per cent of SMEs due to unpaid invoices ahead of the festive season, with 32 per cent reporting that they are having to use their own personal funds to cover cash shortfalls when paying suppliers, as a result of missing invoices.
“Small businesses are vital to Australia’s economy, contributing over $500 billion to our annual GDP,” Damien Greathead, Accounting and Advisor Group Lead at Intuit QuickBooks, commented. “It’s concerning to hear how exposed our SMEs risk being this holiday season, facing challenges with income and cashflow at such a busy and expensive time of year.”
The report highlighted that chasing invoices and managing business admin is causing undue stress and costs valuable time for SMEs, with 39 per cent spending up to 12 hours a month chasing late invoices. The impacts are keenly felt, with 23 per cent citing they “feel bad chasing people for money”, while 21 per cent felt angry when chasing these unpaid invoices. A further 20 per cent reported feeling additional stress and 19 per cent reported feeling overwhelmed when chasing unpaid invoices.
The extra pressures SMEs are facing this year risk derailing their plans to rest, recharge, and spend time with family and friends this holiday season. A total of 67 per cent of SMEs are already admitting to sacrificing precious personal time to get on top of business admin, be that evenings during the week (67 per cent) or while kids are at after-school or weekend extracurricular activities (25 per cent). Meanwhile, those having to multitask admit managing admin on the go can be a struggle, with the majority of SMEs feeling this way (76 per cent).
“It’s an overwhelming predicament which SMEs currently find themselves in – time poor, trying to keep on top of admin while running a business and getting paid on time to keep on top of bills,” Greathead said. “Our advice to small businesses is, you don’t have to go it alone – a financial advisor coupled with reliable and intuitive accounting software – can make a big difference in alleviating stress and keeping on top of business admin including invoicing and getting paid.”
Of the businesses surveyed, 29 per cent only engage an accountant or bookkeeper to assist with tax time, not for support throughout the year. Some of the reported benefits of having an accountant or bookkeeper managing their business throughout the year included time-saving (34 per cent) and reduction in financial stress (30 per cent).
