Unpaid invoices mean SMEs face potential $22bn shortfall

According to research released yesterday (1 November) by global financial technology platform Intuit QuickBooks, small and medium-sized businesses are expecting an average of eight invoices will go unpaid between now and Christmas Day.

The data also found that almost a quarter (23 per cent) of SMEs stated that the pressure of unpaid invoices had been worse this year than previously.

As many SMEs look to shut down over the holiday period into the beginning of January, the lack of cash flow due to unpaid invoices places even more pressure on businesses, while cost-of-living pressures and a potential rate rise are already biting.

Intuit QuickBooks’ research found financial strain is already affecting almost half (46 per cent) of SMEs due to unpaid invoices ahead of the holiday period, with approximately a third (32 per cent) stating that they need to use personal funds to cover cash shortfalls when paying suppliers due to the missing invoices.

Damien Greathead, accounting and adviser group lead at Intuit QuickBooks stated: “Small businesses are vital to Australia’s economy, contributing over $500 billion to our annual GDP.

“It’s concerning to hear how exposed our SMBs risk being this holiday season, facing challenges with income and cash flow at such a busy and expensive time of year,” Mr Greathead said.

The survey also found that those running SMEs are facing the possibility of missing out on time away from the business, with two-thirds (67 per cent) already admitting to sacrificing personal time to get on top of business admin, with 39 per cent spending up to 12 hours a month chasing late invoices.

Mr Greathead said: “Of the businesses surveyed, 29 per cent only have an accountant or bookkeeper to assist with tax time, not as an ongoing relationship throughout the year.

“It can be easy for small businesses to feel alone when faced with these big challenges, but we always encourage them to look for outside help and find those trusted external partners, be it their broker or their accountant, who can often advocate for them and help find solutions to problems that otherwise may seem insurmountable.”

As Mr Greathead added, for businesses struggling with cash flow, brokers can often be a source of support to help them manage their finances and stay in control.

Previously speaking to The Adviser, Chris Slack, broker director at The Finance Consultancy, stated that brokers need to be aware that SMEs will likely be looking for additional working capital options.

He stated that as brokers played a “critical role in the survival of SMEs through COVID-19”, many were now needed by their SME clients “more than ever”.

“The best brokers will be positioned with their clients to give them confidence to be more involved in acquisitions or capital expenditure, regardless of economic headwinds that seem inevitable over the next few months”, Mr Slack added.

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