Earlypay has said that rising costs and uneven business conditions are reshaping the conversations surrounding SME funding decisions across Australia.
SME lender Earlypay has urged commercial finance brokers to expand working-capital conversations with clients, saying uncertain operating conditions are creating an opportunity to provide broader guidance before funding needs become urgent.
The lender said business owners were navigating conflicting economic signals, with insolvencies falling overall, but trade-payment defaults and Australian Taxation Office (ATO) tax debts again trending higher.
Earlypay CEO James Beeson said the uncertainty confronting businesses made forward planning increasingly important.
“With the ongoing uncertainty around geopolitical events, oil prices and interest rates, there is a lot that business owners and their advisers can’t control. So, it’s more important than ever to manage what they can control effectively,” he said.
Beeson said brokers should examine whether a business’s cash position would sustain its expected next phase of trading, with this including forecasting likely demand and assessing the funding required to deliver those sales.
Mixed conditions heighten cash pressure
Earlypay pointed to CreditorWatch figures showing overall insolvencies declining 3.9 per cent in the financial year 2026, even as trade-payment defaults and ATO tax debts rose again.
The lender said the data showed that the business environment remained uneven, with some industries facing sharper cost and cash flow pressures than others.
In transport, postal, and warehousing, insolvencies increased 14 per cent across the financial year, according to Earlypay, as higher fuel costs and interest rates weighed on business owners.
Several recent policy and cost changes are also expected to add to SMEs’ working-capital requirements.
Earlypay said minimum wages increased 4.75 per cent from 1 July 2026, while Payday Super had brought forward the timing of superannuation payments.
It added that the reinstatement of the federal fuel excise on 2 August was also adding to business costs.
Beeson said the response needed to start with a realistic view of expected sales and the cash needed to fulfil them.
“That means forecasting the expected demand for their products or services as accurately as possible and then considering the working capital impact of generating those sales,” he said.
Focus on the cash conversion cycle
Earlypay said the cash conversion cycle provided the most useful lens through which to understand a business’s working-capital needs.
Beeson said that the cycle measured the period from the point cash is paid out for inputs until receipts from customers return money to the business.
“The cycle starts when you pay a supplier, continues while stock is shipped, stored or turned into a product, and ends when the customer pays the invoice,” Beeson said.
The lender said early engagement mattered due to the fact that funding alternatives could narrow once a cash flow problem had become acute.
“Once the root cause of working capital challenges is identified, brokers and accountants can recommend value-added solutions to ease cash flow pressure for otherwise successful businesses,” the lender said.
“The sooner this conversation happens, the better, as alternatives often become more limited when the funding need becomes urgent.”
Beeson said the increasingly competitive finance market would reward brokers who could bring a broader perspective to SME clients’ operating needs.
“In a world where there is so much that SMEs can’t control, brokers that support SMEs by providing value-added guidance around working capital will differentiate themselves from those that remain focused on simply funding the next asset purchase,” he said.
[Related: SMEs adopt defensive posture amid rising costs]
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