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Bibby Financial Services’ report on small and medium-size enterprises

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According to Bibby Financial Services , economic conditions will get worse for small businesses, as the pressure will not ease, even with a second rate cut from the Reserve Bank of Australia. Interest rates have been increasing for the past seven years. Bibby Financial Services are of the view that it will take more rate cuts over the next 12 months to ease pressure on small and medium size enterprises.

Bank loans and overdrafts remain tight during the international credit crisis, and many SMEs are undergoing a cash flow squeeze, caused by the late payment of invoices. According to Bibby Financial Services, retailing services in Australia rely on imports and the sudden fall in the value of the Australian dollar has affected the importing and small businesses.

Fluctuating fuel prices and full employment conditions in industries have also impacted small businesses. The softening property market is an added concern for small business owners as they use mortgages over their homes to raise business loans.

A CPA survey of 500 Australian small businesses with less than 20 employees found that 41% of businesses never prepare a cash flow forecast, 25% never pursue late payments and 70% do not prepare quarterly financial statements.

Bibby Financial Services suggest that businesses must be aware of the break-even point between rising costs and falling revenue and must have their records and accounting up to date. Businesses must follow up overdue accounts and check the credit status of any new customers.

The credit crisis has increased the demand for Bibby Financial Services’ cash flow solutions. Bibby Financial Services’ factoring and discounting facilities help companies to improve cash flow and gain additional working capital by converting 90% of the value of each sales invoice into cash within 24 hours.

An advantage of the cash flow solutions from Bibby Financial Services is that real estate security is not required, enabling funding growth in line with sales. Bibby Financial Services also provide sales ledger management services, which involve issuing statements, handling cash allocations, collecting outstanding payments and maintaining detailed accounts of the business’ transactions.

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