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The non-bank business lender has identified slowed invoice payments as a major issue facing SMEs during the new financial year.
Non-bank business lender Moneytech research has found that delayed payments impacting cash flow for Australian small and medium-sized enterprises (SMEs) are at higher rates than larger operations.
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According to Moneytech, SME operators, who are “generally accepting” 90- to 120-day payment terms, are now required to wait longer if invoice payments are delayed.
Moneytech chief executive Nick McGrath said these conditions are “strangling SMEs”.
“Our internal research shows SME customers chasing invoice payments to maintain cash flow as their main business concern prior to seeking finance products,” Mr McGrath said.
Speaking to The Adviser, Mr McGrath said brokers can provide advice to businesses faced with this issue.
“A broker can help a business owner understand the advantages and disadvantages of different financial products. They can also provide guidance on how to improve cash flow, manage debt, and plan for the future,” Mr McGrath said.
Mr McGrath added that brokers can help businesses in identifying suitable lenders and products due to their “in-depth knowledge of the finance industry”.
“They can suggest suitable financial products like debtor finance, asset-based lending, or invoice factoring based on the customer’s needs and that may help alleviate cash flow issues,” he said.
According to the lender, 15 per cent of businesses reported having sought debt or equity finance, with debtor finance being one of the financial products that can help alleviate SME cash flow issues.
“If a business’ cash is tied up in outstanding invoices, debtor finance helps free up cash by supplying up to 100 per cent of invoices as soon as they are raised, instead of waiting 90 or 120 days, or more, for payment,” Mr McGrath further stated.
“Debtor finance can be used for better cash flow management, realising the full value of customer invoices, paying salaries, paying suppliers, and investing in growth opportunities.”
Majors knocking back SMEs
Obtaining finance from one of the major banks has proven to be another struggle for a quarter of Australian SMEs, recent OnDeck Australia (OnDeck) research found.
Although 66 per cent of SMEs think of Australia’s big four banks when it comes to sourcing finance, according to the March 2023 Brand Intelligence – SMEs on Business Lenders Survey from Agile (formerly Momentum Intelligence), OnDeck’s research has found that 25 per cent of small businesses have had their finance applications rejected by one of the major banks.
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[RELATED: 1 in 4 SMEs declined for big bank finance: OnDeck]
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