Cash flow remains a challenge for Australian businesses – and it’s certainly not easing.
High operational costs and inflation were always going to weigh on balance sheets this year, but conflict in the Middle East has further clouded the outlook, with sectors like agriculture and logistics likely to feel a full and ongoing impact of rising fuel costs.
Closer to home, elevated interest rates and regulatory changes, such as new Payday Super requirements, have added further strain, particularly for smaller businesses.
During a recent appearance on The Adviser’s In Focus podcast, James Beeson, CEO of invoice finance lender Earlypay, spoke of a “perfect storm” emerging, noting that a shortage of cash flow is the number one contributor to insolvencies in Australia.
“Brokers have an important role in advising business owners who are focused on running their business and may not have the headspace or time to consider other financial aspects that brokers are really good at,” he said.
But in times like this, where it’s a challenging economic environment, the value that brokers can add is enormous because there’s a lot of stress with many business owners
– James Beeson, CEO, Earlypay
“But in times like this, where it’s a challenging economic environment, the value that brokers can add is enormous because there’s a lot of stress with many business owners.”
Such a backdrop makes a trusted adviser pivotal.
“For brokers to come in with experience and a fresh perspective and to be able to guide through this time, it’s a critical role,” he added.
“Just like their accountants and other advisers, brokers are front and centre.
“It’s an opportunity to think holistically about how they can support their SME clients.”
State of cash flow
Much has shifted since the beginning of the year – not least including two cash rate hikes from the Reserve Bank of Australia (RBA).
But even at that early stage, there were signs that cash flow conditions were tightening.
A February 2026 survey of 402 SMEs conducted by non-bank lender Lumi illustrates this.
At a glance, the data suggested SMEs had a cautiously positive outlook, with 81 per cent reporting improved financial performance over the past 12 months and 68 per cent saying they had lifted their growth targets for the year ahead
.
However, these businesses weren’t leaving much room for error.
Of those surveyed, 79 per cent said they had less than three months of cash reserves, and 80 per cent expected ongoing or increased cash flow pressure in the year ahead.
A similar sentiment was observed in the SME Sentiment Report undertaken by non-bank lender Prospa and market research firm YouGov.
One in three SMEs (34 per cent) surveyed indicated they expected they would need to access external finance over the next 12 months (up from 31 per cent in September 2025).
At the time, Prospa chief revenue officer Beau Bertoli said the findings suggested a growing need for working capital solutions.
“It’s about staying liquid, compliant and flexible,” he said.
“The businesses that plan early, model their cash flow properly and get advice will be in the strongest position to invest when the timing is right.”
Meanwhile, a March 2026 survey of more than 1,000 SMEs conducted by small business lender Banjo Loans found that more than one in five respondents (28 per cent) saw cash flow as a barrier to growth.
At the time, CEO Guy Callaghan said many small businesses were struggling to strike the right balance between growth ambitions and survival strategies.
“While inflation is clearly the dominant pressure shaping SME behaviour, cash flow pressures are intensifying for many,” he said. “Many SMEs are prioritising viability and survival over growth.”
While some businesses performed strongly, cash flow pressures remained acute for others.
“Across Australia, SMEs continue to grow and hit revenue targets, but cash reserves remain tight and uncertainty is high,” Callaghan added.
“The Compass data shows that SMEs are resilient but cautious and need to carefully manage finances as they navigate business in 2026.”
Finding solutions
Non-banks and major lenders have continued to refine their offerings in response to mounting cash flow pressures, rolling out more flexible funding solutions for businesses.
But the variety of products available – and the differing circumstances of businesses across sectors and sizes – adds a layer of complexity.
In an opinion piece for The Adviser, Recludo Group CEO Tim Brown said this is part of the reason why brokers are often well placed to solve cash flow issues, particularly for SMEs.
“Banks assess lending through centralised credit systems and rigid policy frameworks. That approach works well for standardised residential loans, but it often struggles when dealing with the complexity of small business finances,” he wrote.
“Business owners rarely have simple income structures. They might draw a mix of salary, dividends, and retained earnings. Their income can fluctuate depending on contracts or seasonal demand. Their lending needs can also change rapidly as their business grows.
“Brokers, on the other hand, are used to navigating complexity.
“They work across multiple lenders and understand how different credit policies apply to different borrowers. They also tend to have longstanding relationships with their clients, which means they often have a far better understanding of the borrowers’ broader financial position than a bank credit team assessing the deal from a file.”
This dynamic creates a prime opportunity for an area where brokers can help.
“Banks will always play a central role in business lending, but the idea that they will continue to dominate the distribution of commercial finance without serious competition is becoming harder to defend,” he added.
“Because the reality is that mortgage brokers are already sitting in front of the clients, and once they start bringing those commercial opportunities to market at scale, the banks’ long-held grip on business lending will slip significantly.”
Asking the big questions
So, what can brokers be doing to better support their clients?
Part of it comes down to knowing what questions to ask, according to Beeson, and not shying away from some of the big-ticket issues.
“Stress-testing client scenarios for the current environment is critical. Brokers should be asking: what happens if you can’t access stock for a while? What if consumer demand falls and order volumes decline?” he said.
“From there, it’s about pressure-testing operational needs. Do you actually need the additional equipment you planned for if growth slows? Or, if demand was expected to increase and you’ve already committed to new orders, how exposed are you?
“In some cases, it may be about holding capacity for growth – but in others, it’s about rationalising assets, reducing excess equipment, and preserving cash if demand doesn’t come through as expected.
“I think being as holistic as possible is the best way to add value to your SME clients.”
