SME Cash Flow Challenges

SMEs are feeling keen and confident about business recovery, but many are lacking the necessary cash flow to take advantage of the economic upswing in the lead-up to a post-pandemic world. Another issue for small businesses is the difficulty in accessing business finance. Below we share statistics from Inside Small Business and PayPal Working Capital.

The Statistics

According to the 2021 PayPal Working Capital research, 54 percent of Australian SMEs experienced loss over the past year, with the greatest impacts felt due to COVID-19 (77 percent).

Despite the challenges, the report noted that 21 percent managed to break even, 20 percent experienced some growth, and five percent experienced significant growth. The 25 percent of SMEs who managed to grow through the pandemic’s peak in Australia cited higher demand (35 percent), growth in customer base (36 percent), and consumer preference for local goods and services (26 percent) as major growth drivers.

Cash Flow Challenges

Many Australian SMEs say that cash flow (48 percent) is one of the greatest challenges facing their business. In addition, 49 percent stated that their experience in getting business loans ranged from difficult to extremely difficult, and only 38 percent managed to receive positive feedback on their application. Meanwhile, only 10 percent found it easy or very easy to access financing.

The Verdict

“While we all hope the next 12 months will be far more stable and predictable than the past 12, it’s clear that businesses will continue to value finance solutions that can adjust to changing business realities in real-time, and that can be accessed quickly and easily when they’re needed to help seize sudden opportunities or overcome unexpected challenges.” – Eli Nana, Manager at PayPal Working Capital Australia.

About Us – Nova

If you feel you need assistance with your business cash flow, we offer a reliable invoice financing facility and are committed to the growth of small and mid-sized businesses. Invoice financing is a cash flow solution that allows businesses to access a large percentage of the funds held in their unpaid sales invoices. Your business can enjoy the benefits of the cash flow of the invoice before your customer pays it.

Most small businesses need an overdraft, which can take weeks for approval, to keep operating and enable the business to grow. Invoice factoring is different because you do not have a ‘loan’ as such, and you do not need to secure your funding with property. Your customer invoices act as your security, and approval can be within 24 hours!

If you have any questions reach out to us for an obligation-free chat.

(Source: Inside Small Business 2021)


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