Cashflow and funding concerning SMEs


The survey reveals that SMEs cited cashflow and funding as the most stressful element of business. Meanwhile, credit conditions are a key barrier to growth.

SME owners are working up to 80 hour weeks, are losing sleep about cashflow and funding, while almost one in four are predicting revenue to decline through to the end of 2016, according to results of the Scottish Pacific SME Growth Index.

Since September 2014, Australia’s largest specialist working capital finance provider has engaged specialist research firm East & Partners to conduct six monthly polls of 1200 SME leaders across all states and key industries.

Scottish Pacific CEO Mr Peter Langham said the latest results show that SME confidence has taken a hit despite the resilience of the sector, which according to ABS statistics employs almost half of the 10.7 million Australians in the workforce.

“Over the past two years, SMEs predicting revenue decline have almost doubled (from 13.2% to 24.2%), while those predicting increases have halved their growth forecasts (from 8.6% to 4%),” Langham said.

SMEs predicting positive growth now in minority

For the first time since the Index began, SMEs forecasting positive growth (48.4%) are outnumbered by SMEs forecasting negative growth or no change (51.6%).

“The current environment is clearly placing pressure on Australia’s SME community,” Langham said.

Cashflow a top concern

“SMEs nominated cashflow as the most stressful element of business. They cited credit conditions as a key barrier to growth,” Langham said.

“With the Index highlighting that cashflow keeps 72.5% of respondents awake at night, it’s crucial for these leaders to find the right funding to support their business.”

Turning to non-banks for funding

“Businesses are increasingly looking beyond banks to fund growth and to help ease cashflow concerns. From this time last year, there has been a 30% increase in SME owners planning to fund their growth using a specialist non-bank lender, with one in five now indicating their intention to do so,” Langham said.

He said the SME Growth Index survey took place between July and August, in the aftermath of the Federal Election and UK Brexit referendum. While uncertainty around these events may have influenced some responses, the results were a timely reminder to governments, industry bodies and financial institutions of the importance of having in place the right regulatory and funding systems to stimulate and support the nation’s vital SME sector.

Entrepreneurs still positive

The one area in which confidence has not taken a dive is peoples’ willingness and intention to go it alone. Research revealed Australians are still keen to start their own business, despite barriers and tough conditions. The Index shows one in 10 SMEs are in start-up phase, a consistent figure since data was first collected in September 2014.

Inside Small Business