SMES LOOKING FOR GROWTH INDICATORS: 2014
New research from Bibby and Core Data reveals that financial and insurance services SMEs are the most confident about their business prospects (85%), followed by those from administration and support services (80%) and education and training (79%).
However, while SME confidence is high, almost one in three SMEs report finding cash flow more difficult to manage than 12 months ago and almost half believe there has been no change to their cash flow situation. Cash flow issues experienced in the past 12 months include one in four SMEs (28.9%) report customers making excuses for slow payments, 21% report declining margins and 15.8% have had issues with Government ‘red tape’, compliance and tax administration.
Triggers directly from customers that have negatively impacted SME cash flow in the past 12 months include 27% have suffered late payments from a client, 15.3% have had a bad debt because a customer has gone bust and 12.6% have had a client negotiate to pay an invoice in monthly instalments.
Mark Cleaver, managing director, Australia and New Zealand, said: “Problems like these are forcing some SMEs into less productive activities, like having to spend more time chasing payments (17%). We also found that some SMEs (11%) are offering discounts for early payment and 15% of SMEs are even refusing to trade with some clients due to non payment.”
The research from Bibby Financial Services and Core Data, conducted from February 3-14 on 859 SMEs across Australia, reveals that Australian SMEs hold a largely neutral position in relation to cash flow. The Bibby SME Cash Flow Index Score of +1.02 highlights that cash flow has marginally improved from July 2013, though it has sustained a recovery from a low in August 2012.
Andrew Inwood, founder and principal of Core Data, said, “Despite high levels of business confidence, almost half the respondents (49%) think the Australian economy will stagnate this year. One in three (33%) expect the domestic economy will contract, while just 18% think it will expand.