Global debtor finance specialist Bibby Financial Services - Flexible Cash Flow Solutions supports calls for tax breaks for Australia’s small businesses based on a recent research that revealed that the sector is facing increased pressure on profits and their survival.
According to Bibby’s Managing Director, Greg Charlwood, small businesses deserved special consideration at the federal government’s Tax Forum being held to examine how business tax reform can increase productivity.
The Bibby Barometer survey of small business proprietors reveals that small businesses have greater pressures now than a year ago on almost all measures. Not only are they under higher stress with a more uncertain cash flow than a year ago, these businesses are facing longer delays in getting paid with additional problems such as difficult market conditions, staffing issues and access to finance bogging them down more.
Bibby’s survey and recent insolvency trends indicate the extent to which these pressures threaten Australia’s business productivity, says Mr Charlwood.
Key findings of the Bibby Barometer survey of small businesses:
- One in five small businesses would become insolvent if they lost their two largest customers or if their two largest suppliers put them on cash-on-delivery status
- A further 43% would be forced to downsize if subject to either of these two events
- Only 27% were confident about managing through the tightening cash flow that resulted from one of these events
- Many small businesses needed to access personal savings (46%) or take out an overdraft (38%) to alleviate cash flow problems
- 62% of small businesses feel that their bank requires too much security for their borrowings or overdrafts
- 22% regard their banks’ requirements as excessive
- Funding will continue to be an issue for small business proprietors over the next 12 months
- 21% intend to seek new funding for growth while 19% are looking for working capital assistance
- 34% will be looking to pay down an existing loan and 20% to refinance existing debt
New South Wales has consistently had the highest number of companies going into external administration over the past ten years, followed by Victoria and Queensland.
Commenting on the statistics, Greg Charlwood said small businesses deserved special consideration in any proposed government changes affecting business, given this sector’s high sensitivity to bad debts.