Top Financial Challenges Facing Australian SMEs

Some of the most innovative and forward-thinking businesses in Australia are SMEs. With their ability to quickly adapt to technology and to scale up or down, smaller businesses often have advantages over larger, more cumbersome businesses.

Maybe that’s why so many Australian businesses find themselves in the SME category. According to the Australian Small Business and Family Enterprise Ombudsman, small businesses with fewer than 20 employees account for 97 per cent of the businesses in the country (that’s more than 2 million businesses). Medium businesses (20-199) employees account for 2.5 per cent. 

What kinds of financial challenges do these small and medium businesses face in Australia? What are the hurdles they must overcome in order to stay afloat and prosper? In this post, we’ll look at the biggest financial issues facing Australian SMEs.

Cash Flow

Regardless of the overall economy, cash flow is always a challenge for SMEs, and it can create significant problems for businesses that struggle to pay invoices in a timely manner.

This is especially true during periods of growth when you may need to hire more employees or spend more on supplies before you get paid for products and services. No matter how effective your marketing, your customer service, your business strategy and your products are, if you run out of cash, everything else can fall to pieces.

That’s why it’s so important to have extensive planning, cash flow analysis and budget forecasting in place at all times. If these are not your strong points, you can always outsource some or all of these tasks in order to keep your cash flow healthy enough to support your everyday operations and your future growth.

Capital

Another financial challenge facing SMEs is access to capital. Whether you’re just starting out and need capital for equipment, inventory and fit outs or you’ve been in business for some time and need to replace vehicles or purchase new office equipment, capital can be difficult to come by.

Earlier this year, it was reported that there was a $60 billion shortfall for SME funding with Australia’s big four banks. This lack of capital has serious consequences in a country where most people are employed by SMEs. Another hurdle SMEs often face is that interest rates can be higher for small business loans than for large business loans. Fortunately, most SMEs are able to find sources of capital; the key is to make sure that the arrangements work well with your overall business strategy. 

The way you structure your funding can have long-lasting consequences for your business’s financial future, including your taxes and your ability to borrow additional funds.

How Outsourced Financial Leadership Can Help

With so few employees and so much responsibility, outsourcing financial leadership can reduce your stress while you receive the guidance and direction you’ve been looking for. With outsourced CFO services, you can access as little or as much help as you need. Your financial leadership will be scalable; you won’t be paying for services you’re not using.

With outsourced financial leadership for your SME, you can take advantage of the following:

• Easy access to real-time, relevant data
• The latest financial technology and tools
• Deeper insights into your business’s finances
• Accurate, timely reporting
• Experienced financial firepower
• Industry-specific advice based on accurate data
• Better business decisions
• The elimination of staff hassles

Ultimately, hiring outsourced CFO services allows you to focus on the parts of your business that you do best. You can offload financial worries to experts who have extensive knowledge and skills regarding SMEs.

To speak with one of our business experts about how outsourced financial leadership can help your SME, get in touch with us at Altus Financial. We look forward to speaking with you.