Can Australian small businesses survive without government support?

Small businesses in Australia are getting crushed from all sides. They are witnessing inflationary pressure, late payment from customers, and the Omicron variant is forcing them to work with reduced staff. All these factors are making it difficult to keep their businesses alive.

Late payment of invoices is an issue faced by many Australian SMEs. A study by the country’s Payment Times Reports Register highlights that it takes about 37 days for a customer to make payment, even though there is only a 30-day maximum waiting period allowed. The problem is more severe in the manufacturing sector, which takes about 50 days to honour an invoice.

Small business ombudsman Bruce Billson says more than 30% of invoices are being paid late by big businesses that have already been invoiced.

Staff shortages in some sectors and supply chain issues leading to higher input costs, are forcing SMEs  to seek urgent financial support from the government.

But the federal treasurer of Australia, Josh Frydenberg, believes there is enough private savings in Australia, which means they don’t need any financial support. However, this claim has been rejected by the small businesses.

Small and medium enterprises (SMEs) have the potential to drive an economy, but when the government support is not coming, it is important that SMEs work to create sustainable strategies to bring their cash flows in order.

One of the ideas that we explain in our book Let The Cash Flow is the Virtuous Revenue Cycle (VRC), which comprises eight steps to getting paid on time. It includes taking ownership of the problem and reviewing your credit policy to motivating your sales team, as well as constant and consistent communication with your customers.