Survival of Australia’s SMEs threatened by cash flow issues
Announcement posted by FCR (Financial & Corporate Relations Pty Limited) 27 Mar 2012
Sydney, 26 March 2012 – In the past 12 months the survival of 22% of small to medium enterprises (SMEs)
was threatened due to cash flow shortages, according to the latest Bibby Barometer Small Business Survey.
The survey found that Australia’s small business owners are increasingly concerned about the current global
economic situation, with around half (47%) more concerned than they were a year ago.
Twenty-six percent of decision makers had difficulties meeting liabilities to suppliers on time, and 24% had
difficulties making their tax payments. The majority of SMEs were also worried about interest rates, with 54%
believing that an interest rate hike of 25 basis points will impact or seriously impact their business.
Conducted in February 2012 and the second of its kind, the Bibby Barometer Small Business Survey is a
national study run twice yearly, surveying primary decision makers in over 200 non-retail SMEs.
Bibby Barometer Index shows decrease in small business expectations
From the overall Bibby Barometer Small Business Survey, a Bibby Barometer Index was constructed which
measures small business expectations for a healthy business environment - based on intention to invest in
the business, expectations of sales growth, ease of managing cash flow, business confidence, and levels of
business stress. Since the previous reading in July 2011, this Index shows that small business expectations
have decreased overall by 6%.
Greg Charlwood, Bibby Financial Services Managing Director, commented: “Our second Bibby Barometer
Index has revealed that expectations regarding sales growth have deteriorated and cash flow is more difficult.
It is clear that current global economic conditions are not only impacting large corporations but also filtering
down to Australia’s SME sector.
“According to the Bibby Barometer Small Business Survey, managing cash flow (39%) ranks at the same
level as three other major business headaches: staffing issues (40%), a lack of time to enjoy family life (40%),
and Government red tape and tax administration (39%).
Federal Cabinet is currently considering a package of reforms for small businesses, including tax relief to
commence in July 2012, in addition to other measures to reduce red tape and provide exemptions from unfair
dismissal laws.
“Given the Bibby Barometer Small Business Survey findings, we believe that these measures are indeed
desirable. The proposed package of reforms will start to address the major small business headaches
identified in our survey, and will provide some much needed relief for the SME sector,” he said.
Length of payment time a concern for SMEs
A contributing factor to business cash flow problems is the length of time small businesses are waiting to be
paid, with 49% of small business decision makers experiencing delays in payment, and 27% experiencing
bad debts in the past 12 months, according to the survey.
“Not surprisingly, many remain pessimistic about their future payment terms. Over a third (36%) expect the
length of time they must wait to be paid will increase further in the coming quarter,” said Mr. Charlwood.
Bank lending terms still rankle
“The majority of small business decision makers are of the opinion that banks require too much security these
days. As a result, many small businesses are looking beyond the traditional sources of funding, with 34%
more likely to seek credit from sources other than banks in the next 12 months,” Mr Charlwood said.
The Bibby Barometer Small Business Survey found that small businesses with 10 to 19 employees (63%)
and those with turnover of $1M or more (64%) are most likely to feel that the banks require too much security.
“It is to be expected, in these circumstances, that factoring is growing in popularity, since it gives SMEs
almost immediate finance when they bill their clients - without needing to provide their home or commercial
property as collateral,” he said.
ENDS
Bibby Financial Services is the largest global independent specialist provider of debtor finance (also known as invoice
finance, factoring, cash flow finance and invoice discounting) - a flexible cash flow funding tool for small and medium
sized businesses. It maintains a network of 32 companies and services approximately 5,400 clients in 14 countries
worldwide, including the UK, US, Canada, France, Germany, Ireland, The Czech Republic, Sweden, Slovakia, Poland,
India, Hong Kong, Australia and New Zealand. It is part of the Bibby Line Group, a family-owned business-to-business
services group with origins in shipping dating back over 200 years to 1807.
Invoice finance is designed to improve business cash flow and support business growth by releasing cash tied up in
unpaid invoices. Unlike other funding arrangements, no real estate security is required, making it more accessible for
small and medium sized business owners.
For more information on Bibby Financial Services please visit www.bibby.com.au
was threatened due to cash flow shortages, according to the latest Bibby Barometer Small Business Survey.
The survey found that Australia’s small business owners are increasingly concerned about the current global
economic situation, with around half (47%) more concerned than they were a year ago.
Twenty-six percent of decision makers had difficulties meeting liabilities to suppliers on time, and 24% had
difficulties making their tax payments. The majority of SMEs were also worried about interest rates, with 54%
believing that an interest rate hike of 25 basis points will impact or seriously impact their business.
Conducted in February 2012 and the second of its kind, the Bibby Barometer Small Business Survey is a
national study run twice yearly, surveying primary decision makers in over 200 non-retail SMEs.
Bibby Barometer Index shows decrease in small business expectations
From the overall Bibby Barometer Small Business Survey, a Bibby Barometer Index was constructed which
measures small business expectations for a healthy business environment - based on intention to invest in
the business, expectations of sales growth, ease of managing cash flow, business confidence, and levels of
business stress. Since the previous reading in July 2011, this Index shows that small business expectations
have decreased overall by 6%.
Greg Charlwood, Bibby Financial Services Managing Director, commented: “Our second Bibby Barometer
Index has revealed that expectations regarding sales growth have deteriorated and cash flow is more difficult.
It is clear that current global economic conditions are not only impacting large corporations but also filtering
down to Australia’s SME sector.
“According to the Bibby Barometer Small Business Survey, managing cash flow (39%) ranks at the same
level as three other major business headaches: staffing issues (40%), a lack of time to enjoy family life (40%),
and Government red tape and tax administration (39%).
Federal Cabinet is currently considering a package of reforms for small businesses, including tax relief to
commence in July 2012, in addition to other measures to reduce red tape and provide exemptions from unfair
dismissal laws.
“Given the Bibby Barometer Small Business Survey findings, we believe that these measures are indeed
desirable. The proposed package of reforms will start to address the major small business headaches
identified in our survey, and will provide some much needed relief for the SME sector,” he said.
Length of payment time a concern for SMEs
A contributing factor to business cash flow problems is the length of time small businesses are waiting to be
paid, with 49% of small business decision makers experiencing delays in payment, and 27% experiencing
bad debts in the past 12 months, according to the survey.
“Not surprisingly, many remain pessimistic about their future payment terms. Over a third (36%) expect the
length of time they must wait to be paid will increase further in the coming quarter,” said Mr. Charlwood.
Bank lending terms still rankle
“The majority of small business decision makers are of the opinion that banks require too much security these
days. As a result, many small businesses are looking beyond the traditional sources of funding, with 34%
more likely to seek credit from sources other than banks in the next 12 months,” Mr Charlwood said.
The Bibby Barometer Small Business Survey found that small businesses with 10 to 19 employees (63%)
and those with turnover of $1M or more (64%) are most likely to feel that the banks require too much security.
“It is to be expected, in these circumstances, that factoring is growing in popularity, since it gives SMEs
almost immediate finance when they bill their clients - without needing to provide their home or commercial
property as collateral,” he said.
ENDS
Bibby Financial Services is the largest global independent specialist provider of debtor finance (also known as invoice
finance, factoring, cash flow finance and invoice discounting) - a flexible cash flow funding tool for small and medium
sized businesses. It maintains a network of 32 companies and services approximately 5,400 clients in 14 countries
worldwide, including the UK, US, Canada, France, Germany, Ireland, The Czech Republic, Sweden, Slovakia, Poland,
India, Hong Kong, Australia and New Zealand. It is part of the Bibby Line Group, a family-owned business-to-business
services group with origins in shipping dating back over 200 years to 1807.
Invoice finance is designed to improve business cash flow and support business growth by releasing cash tied up in
unpaid invoices. Unlike other funding arrangements, no real estate security is required, making it more accessible for
small and medium sized business owners.
For more information on Bibby Financial Services please visit www.bibby.com.au