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Supply chain issues drive SME alternate funding support: ScotPac

by Fabian Cotter11 minute read
Supply chain issues drive SME alternate funding support: ScotPac

Rising inflation and increased costs are being offset — or absorbed — by Australian SMEs quite differently, ScotPac’s latest Growth Index has revealed.

To better navigate supply chain disruptions, an increasing number of Australian small and medium-sized enterprises (SMEs) are feeling the need to reach out for alternate business funding help, general risk advice, and even new supplier network referrals, ScotPac’s latest half-yearly SME Growth Index report has underlined.

Disturbingly, all 718 SMEs engaged in the index (annual revenues of $1 million to $20 million in August 2022) covering the six months to September 2022 indicated some form of supply chain disruption.

ScotPac’s biannual SME Growth Index is Australia’s longest-running research report on SME sentiment towards revenue growth prospects, it explained; round 17 research was conducted by East & Partners.


The exact breakdown of the somewhat increasing ‘cry for help’ saw 25 per cent nominate a need for alternate business funding tools, such as invoice finance; 20 per cent highlighted a general risk advice and guidance requirement; and 16 per cent outlined new supplier network referrals as a requirement, the index found.

The emerging demand comes after a stonking 75 per cent of SMEs reported their cost base expanded by an average of 15 per cent due to inflation and other input cost rises.

In response thus far, the index found almost two-thirds of SMEs increased pricing by an average of 14.5 per cent; one in three SMEs said they were absorbing rising costs, while 5 per cent of SMEs said they had lowered their prices in a bid to “stand out from competitors”.

Further insights related to supply chain disruptions for SMEs included:

  • Larger SMEs ($5 million to 20 million revenue) experienced average production and other input cost rises of 20 per cent, compared to 12 per cent for smaller SMEs ($1 million to $5 million revenue).
  • Larger SMEs increased the price of their goods and services by an average of 18 per cent, compared to an average increase of just 1.5 per cent for smaller SMEs. 

Options and solutions available

ScotPac chief executive, Jon Sutton, said despite the easing of COVID restrictions in 2022, severe pockets of supply chain disruption were still being felt by SMEs.

“Supply chain disruptions affect a huge range of the goods and services we rely on every day, and the businesses that supply them,” Mr Sutton said.

“Anyone who has tried to buy a new car in the past two years will have first-hand experience.

“Just this week we have seen reports of pallet shortages that could impact the delivery of food, groceries and medicines to supermarkets and pharmacies across the country, which again will affect the cost of doing business.

“A lot of business owners we work with are looking to invest in making their supply chains more resilient by purchasing reserve inventory, building or leasing warehouse space, sourcing additional suppliers or adding digital solutions.

“ScotPac has the breadth of products and experience to help more businesses invest in their supply chain than any other non-bank lender; however, we know that many SMEs are not sure how to fund purchases or upgrades.

“That is why we encourage SMEs to talk to their advisors about releasing working capital through options like invoice or asset finance because you may have more solutions available than you realise.

Sector types that get involved

Sectors represented in the ScotPac survey included manufacturing (14.5 per cent); business services (14.1 per cent); retail (11.4 per cent); wholesale (11.0 per cent); personal/other services (10.6 per cent); construction (9.6 per cent); and 28.8 per cent all other industries including transport, mining, agriculture, media, accommodation, finance (non-bank), and electricity.

[Related: Growing SME debt finance puts brokers in focus, says Scotpac]

jon sutton   ta


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