25% of small businesses don’t have a recovery plan, even fewer access financial advice: ScotPac
Despite these financially tough times, the majority of small businesses are still choosing to navigate their money matters alone instead of turning to professional advice.
Research from non-bank lender ScotPac revealed that only 18% of small businesses seek out assistance for strategic planning and just 1 in 10 reach out to experts for help with risk management.
ScotPac’s biannual SME Growth Index also found the most common type of advice that small business owners sought out was for tax and compliance, with 93% of respondents nominating this option.
But ScotPac’s chief executive, Jon Sutton said that too many small businesses aren’t getting the support they need for other key areas, including cashflow and pandemic recovery.
For instance, ScotPac’s research found that 25% of business owners aren’t sure about the measures they need for recovery, while a further one in four have experienced cashflow issues after getting their loan application rejected.
“The research shows business owners have so much uncertainty about the right way forward. Around two-thirds are looking at restructuring either their business set up or the way they fund the business in 2021, yet so few are seeking expert advice to help them restructure,” Sutton said.
“Accountants, brokers, bookkeepers and other trusted business advisors should be front and centre for SMEs to help them navigate these complex times.”
SME tactics to manage cashflow
With EOFY and tax time just around the corner, June could be a great time for businesses to revisit their budgets and financial records.
Sutton said that accountants and brokers can help with this process, whether it’s figuring out how much working capital you’ll need to support the business or finding new ways to fund your operations.
If you’re wondering what other small businesses have been doing to improve their cashflow, here are some of their strategies according to ScotPac:
- Cashflow forecasts: This involves mapping out your business income and expenses over a set period of time. 28% of respondents said they undertake these forecasts, but given that cashflow is the lifeline of any business, Sutton said more SMEs should be considering this strategy.
- Customer focus: To boost their revenue this year, 27% of SMEs looked for ways to retain existing customers while 22% prioritised attracting new customers.
- Making arrangements with the ATO: Struggling to settle any debts with the Australian Taxation Office? You’re not alone, as 17% of SMEs said they planned to manage their cashflow this year by setting up a payment plan with the ATO.
- Invoice finance: This is a type of business loan that lets you access working capital tied up by unpaid business invoices. Rather than waiting for weeks or months for these payments to roll in, invoice finance lenders can give you up to 85% of the funding upfront. ScotPac said it’s pleasing to see 16% of SMEs take advantage of this loan option this year to help smooth out ups and downs in their cashflow.
Read our guide to invoice finance for a more detailed look at its pros and cons. Or if you’re wondering what other loans can help your SME recover, check out our article on finance types to get your business back on track.