Cash flow issues putting half of Australia’s SMBs at risk

Cash flow issues putting half of Australia's SMBs at risk

  •  46 per cent of Australian small business owners have been at risk of being unable to pay their employees1
  • More than 63 per cent of Australian small businesses have experienced cash flow issues in the past year
  • Australian small businesses have lost opportunities worth an estimated $5.8 billion due to insufficient cash flow1

Insufficient cash flow is crippling Australia’s small businesses with close to half of business owners reporting they have been at risk of not meeting payroll obligations in the past twelve months. Moreover, according to research commissioned for cloud accounting solution Intuit, cash flow issues are also inhibiting small business owners from taking advantage of thousands of dollars of opportunity. To the tune of $5.8 billion each year.

Fifty per cent of business owners reported they lost AUD$10,000 or more by foregoing a project or sale because of issues created by insufficient cash flow. Cash flow problems are so troublesome 54 per cent of respondents reported they were losing sleep over cash flow concerns.

Kane Munro CPA, Director at Accountancy Online said It’s understandable that small business owners are losing sleep over cash flow:

“It’s a make or break issue. My advice to small business owners who are having trouble is to simplify and automate their accounting processes. Cloud accounting solutions can be used to generate instant reports to make predictions for future cash flow. Allowing businesses to more easily prepare and adapt,” Monro said.

Payroll preparation

The study found preparing for payroll obligations also eats into many small business owners’ time. With 47 per cent reporting it takes them over a week to prepare for payroll. Furthermore, late payments are taking their toll with nearly a third (31 per cent) of small business owners in Australia. Estimating their company currently has more than AUD$20,000 in outstanding receivables.

“The results are a huge red flag for Australian business growth.” John Dunkerley, Country Manager, Intuit Australia said

“Our research emphasises the importance of regularly reviewing and analysing cash flow. Day-to-day operational demands can make finding the time to do this difficult. But without money being transferred into your business you will find it hard to grow, or even operate effectively.”

Online solutions

Dunkerley says given the proliferation of affordable online accounting solutions its disappointing more small businesses aren’t taking advantage to take better control of their finances.

“Business owners can increase their efficiencies across a range of business tasks. Such as preparing their bank and credit accounts, providing statements and organising their superannuation and, being STP compliant.” Dunkerley says.

Small business owners can find out more about how to manage their cash flow when Intuit holds a financial health session at its QuickBooks Connect conference in Melbourne on May 30-31.

If you think your business might benefit from bookkeeping services. Maybe you need someone to lodge BAS. Perhaps you need a bookkeeping software health check, setting up your books. Then above all don’t hesitate to get in touch. We’ll tailor a package that sets you up correctly from day one.

Contact Timewise Financial Solutions on 0419 181 082 or by clicking here today.