The latest survey by global debtor finance specialist Bibby Financial Services - Flexible Cash Flow Solutions reveals growing optimism among small businesses about sales in the coming 12 months.
The Bibby Barometer survey shows that small business optimism has returned to levels not seen in almost two years with 65% of small businesses expecting sales growth, up from 55% in July 2011.
The recovery in expectations of sales growth is also positively impacting business investment decisions with 28% intending to invest in their business in the coming 12 months compared to 20% six months ago. About half (49%) intend to maintain their current level of investment while only 8% remain pessimistic and expect a decline in sales over the coming year.
Conducted bi-annually on over 200 small businesses, the latest Bibby Barometer survey found that almost half (47%) of Australian small business decision makers are still concerned about global economic conditions.
Gary Green, National Sales Director, Bibby Financial Services observes that there is no doubt small business sentiment is improving with low and falling interest rates having had a positive impact on the majority (57%) of small businesses.
However, according to Mr Green, despite the recovery in business optimism, cash flow continues to be a leading constraint with 48% of small businesses experiencing problems with cash flow, which is little changed over the past 6 months (49%).
Highlights of the Bibby Barometer survey – cash flow issues:
- 48% are experiencing delays compared to 12 months ago
- 34% report having an invoice that was months overdue in the past year
- 23% have had a customer go bust
- 21% have had their clients increase their terms of trade so they have to wait longer to be paid
- 73% have implemented new methods for managing their cash flow situation
- 24% offer early payments discounts
- 24% conduct cash flow forecasts
- 20% conduct periodic cash flow health checks with accountants or advisers
- 19% conduct credit checks on new customers
- 20% manage cash flow by dipping into their personal finances
- 17% take out or increase their overdraft (17%) to manage cash flow
Looking ahead, many small businesses have become more pessimistic about payment terms with 37% expecting the length of time to be paid to increase in the coming quarter. Most (57%) expect the time it takes for them to be paid to remain the same.
The Barometer showed that 22% of small businesses intend to seek new funding for growth over the coming 12 months and 17% will be looking for funding to provide working capital, while 31% will be looking to pay down an existing loan and 22% intend to refine existing debt.