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SMEs should be encouraged to invest for future productivity

Announcement posted by FCR (Financial & Corporate Relations Pty Limited) 24 Apr 2012

Sydney, 23 April 2012 – Business financier Bibby Financial Services is adding to calls for Federal Budget tax relief for small businesses, after finding that only 30% of small to medium sized enterprises (SMEs) are planning to invest in their businesses in the next 12 months, while 19% plan to sell off assets.

Bibby’s National Head of Sales Gary Green, commented: “Following the release of the Business Tax Working Group final report recently, the Federal Government is considering the recommendation that small businesses should be able to offset losses incurred in major investment spending of up to $1 million against tax they have paid in the prior two years. The report proposes that this ‘loss carry-back’ mechanism be phased in from 2013-14, with an initial one year carry-back period.

“Our recent research shows that small businesses are even more stressed than they were a year ago. SMEs are weighed down by cash flow concerns, with 27% experiencing bad debts in the past 12 months. The proposed legislation will give small businesses much needed relief and allow them to focus on not just surviving but growing, impacting positively on the wider economy,” Mr Green said.

“There is likely to be some hesitation from big business regarding how such a scheme will be funded, but we believe such businesses have been performing reasonably well in recent times, particularly in those local economies allied to mining. It is time the focus shifted towards small business, given that insolvency rates remain high.

“Managing a small business is a tough balancing act. Our Bibby Barometer Small Business Survey conducted in February this year showed that more than one in three SMEs would need to downsize or would become insolvent if their two largest suppliers put them on cash-on-delivery status (39%) or if they had to write off a debt of 5% of turnover (37%).

“While small businesses are experiencing difficult times, they face the need to innovate and invest to take advantage of structural changes in the economy – at a time when many large businesses, including mining companies and the banks, are making record profits,” Mr Green said.

According to Dun & Bradstreet’s March quarter 2012 Trade Payments Analysis, the average time taken for the payment of bills by Australian firms was 52.6 days, substantially longer than in pre-GFC times.

“The report confirms findings from our Bibby Barometer Survey – that many small business decision makers are suffering from late payments and many remain pessimistic about payment terms, with 36% of businesses expecting the length of time they must wait to be paid to increase further in the coming quarter,” said Mr Green.

The survey found that the use of early settlement discounts to encourage timely payment of invoices was common among small businesses, with 45% of surveyed businesses offering this facility, most commonly within the range of 3 to 6%.

Conducted in February 2012, the Bibby Barometer Small Business Survey is a national study run twice yearly, surveying primary decision makers in over 200 non-retail SMEs.


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 <http://www.bibby.com.au>