Over 1/3 of SMEs unaware of alternative financing options

Business management platform MYOB has released new research based on a survey of 1,000 businesses revealing that over a third (39 per cent) of Australian small and medium-sized enterprises (SMEs) have experienced cash flow issues since March 2022, with an additional 48 per cent facing financial strain in the six months prior.

As a result, this has led to 28 per cent of SMEs looking for financial assistance over the last 12 months, with a further 28 per cent planning to do so over the next year.

According to the findings, SMEs need financial support to cover essential costs such as wages and supplies (26 per cent), buying or upgrading equipment (34 per cent), cash flow improvements (30 per cent) or help with paying for operating expenses (27 per cent).

Immediate access to cash was a key factor for 32 per cent of respondents when it comes to applying for business finance.

Almost three-quarters (74 per cent) of businesses surveyed for the MYOB Business Monitor in June stated they needed cash immediately, and 54 per cent noted that by the time they’d been approved for funding from a bank or financial institution, their cash flow issues had already been resolved.

Further findings revealed that 68 per cent of SMEs have never heard of alternative financing methods such as invoice financing to quickly alleviate cash flow challenges, with 71 per cent confusing it for something else.

The research indicated that 58 per cent of SMEs believed that invoice financing could be an effective option after learning more about it, with 53 per cent stating that they would consider it in the near future.

MOYB head of go-to-market, financial services, Steve Price noted that businesses are currently facing “really tough financial pressures due to rising costs across wages, energy and fuel” along with purchase costs hitting record highs.

“We’re looking at the highest quarterly wage increase in 10 years, with our recent research showing over half of Australian SMEs have increased salaries in the past year, while raising employee pay is a priority for four in five businesses,” Mr Price said.

Mr Price added that the lack of awareness surrounding alternate financing methods signalled that “many could be missing out on a fast and effective way of easing cash flow shortfalls”.

Written by Adrian Suljanovic

Last Updated: 17 October 2022

Published: 18 October 2022