Australian businesses losing $5.8 billion due to cash flow

Thomas Stelzer 10 May 2019 NEWS

Businessmen with wall of post-its Image: Getty Images

Insufficient cash flow is costing SMEs billions each year.

Australian small businesses are missing out on valuable opportunities due to a lack of cash flow, according to a new study by Wakefield Research and Intuit Australia.

The study surveyed 500 SME owners and found half have lost at least $10,000 by abandoning a project or sale because of cash flow issues, with a total cost of $5.8 billion each year.

46% of businesses also reported they had been at risk of not being able to pay their employees on time, due to cash flow issues, and 54% also agreed these issues had kept them up at night.

Overall, 63% of Australian SMEs had experienced cash flow difficulties more than once in the last year, with 31% estimating that their business currently had over $20,000 in outstanding receivables.

John Dunkerley, country manager for Intuit Australia, believes the cash flow situation facing local businesses is alarming. "It's a huge red flag that so many small business owners in Australia are turning down opportunities and missing out on additional revenue as a consequence of issues with their cash flow," he 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."

Almost half of surveyed businesses reported that it took more than a week to prepare for payroll, which was exacerbating existing cash flow and time management issues. While most business owners reported issues around payroll, the study found only 44% were using software to help manage payroll.

Dunkerley says businesses should be taking more proactive steps to combat the reality of cash flow struggles. "It's disappointing that many businesses are not taking advantage of affordable, easy to use online financial management tools, especially given most Australians are very savvy with their personal use of technology."

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