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Half of small businesses reporting decreased stock, reduced cash flow

by Sam Nichols5 minute read

Over 50 per cent of small businesses lack the stock to capitalise on Australia’s reopening, while 44 per cent are experiencing impacted cash flows.

New research published by business lender OnDeck Australia has suggested that roughly half of the country’s small businesses lack the stock to take advantage of post-lockdown Australia, and that close to half are reporting impacted cash flows from COVID-19 regulations. 

According to the data, which was collected by Octopus Group from 300 Australian small and medium-sized enterprise (SME) owners between 19 and 22 October, 49 per cent of the respondents stated that they had the trading stock in place “to make most of the end [of] lockdown”.

Approximately 33 per cent of the respondents also noted that they required additional stock following the lifting of lockdowns – a figure that rose to 42 per cent when speaking exclusively to small businesses based in Victoria. 

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However, while the need for additional stock can be seen as a positive, the same research concluded that 44 per cent of businesses expressed that their cash flow had suffered as a result of lockdowns. 

Further research reinforces this notion of smaller businesses requiring support as Australia reopens, with one Prospa-commissioned survey, published last week, suggesting that 37 per cent of small and medium-sized enterprises required an average of $46,000, largely to either purchase new tools and equipment or to invest in restocking. 

OnDeck Australia national partnerships manager Nick Reily said that he believes that cash flow plays a critical role for small businesses, including in the restocking process and early payment discounts, but in the context of COVID-19 and disrupted supply chains, the priority isn’t reduced costs.

“Today, businesses need to be able to act fast, and order stock well in advance given possible delays in procurement,” Mr Reily said.  

“When businesses have appropriate cashflow funding in place, they are in a strong position to have conversations with alternative suppliers if their regular supplier cannot have stock to them on time.”

Mr Reily noted that he believes that this is a situation where brokers could be valuable for small businesses – stating that owners tend to be time-poor and are “often unfamiliar with funding options beyond their regular bank”. 

“Brokers can highlight the availability of more efficient financing choices, and manage the application process on behalf of the small business,” Mr Reily added.

“It is critical for small businesses to act early to have the necessary cashflow in place. This is a practice that likely needs to extend well beyond the end of lockdowns – and the festive season.

“The shock that COVID-19 has delivered to global supply chains will take time to resolve.”

You can find out more about writing SME finance in the November edition of The Adviser magazine, out now.

For more on diversifying into asset finance and SME loan writing then make sure you attend the SME Broker Bootcamp in 2022.

The free event has limited places, so please make sure you secure a spot today.

You can register for the SME Broker Bootcamp 2022 here.

[Related: Keeping the cash flowing]

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Sam Nichols

Sam Nichols

AUTHOR

Sam Nichols is a journalist at The Adviser and Mortgage Business. His reporting has featured in a range of outlets including ABC News, SBS' The Feed, and VICE.

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