04/04/2012 - 11:01

SMEs battling cash-flow shortages, survey shows

04/04/2012 - 11:01

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Cash is the lifeblood of small to medium enterprises but nearly a quarter report that in the past year cash-flow shortages have threatened their survival.

Research by Bibby Financial Services shows 22 per cent of SMEs were short of cash, 26 per cent reported they had difficulties meeting liabilities to suppliers on time and 24 per cent had difficulties making their tax payments. 

The majority of SMEs are also worried about interest rates, with 54 per cent saying they believe an interest rate increase of 25 basis points will affect or seriously affect their business.   

The Bibby Barometer Small Business Survey is run twice a year and is now in its second year. It surveys more that 200 non-retail SMEs.

Since the previous reading in July 2011, the index shows that small business expectations have decreased overall by 6 per cent. Sales growth expectations have also deteriorated.

The survey found that small business owners were increasingly concerned about the current global economic situation, with around half (47 per cent) more concerned than they were a year ago. 

“Managing cash flow (39 per cent) ranks at the same level as three other major business headaches: staffing issues (40 per cent), a lack of time to enjoy family life (40 per cent), and government red tape and tax administration (39 per cent),” Bibby Financial Services managing director Greg Charlwood said.

A contributing factor to cash-flow problems is the length of time small businesses are waiting to be paid.

About 49 per cent of small business decision makers are experiencing delays in payment and 27 per cent have had bad debts in the past 12 months, according to the survey.

“Not surprisingly, many remain pessimistic about their future payment terms,” Mr Charlwood said. “Over a third expect the length of time they must wait to be paid will increase further in the coming quarter.”

Federal cabinet is considering a package of reforms for small businesses, including tax relief due to start in July. This may come on top of other measures to cut red tape and provide exemptions from unfair dismissal laws.

 

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