The Senate inquiry into the ability of SMEs to access finance began this week after an increasing number of small businesses have complained about the lack of access to financing.
Chief executive of debtor financier Bibby Financial Services, Greg Charlwood, said banks and the Australian Tax Office may take a harder line this year toward small businesses who are late payers.
“In the past couple years many small to medium sized companies have suffered extremely constrained cash flows and it looks like there will be no change in coming months, particularly as the major lenders are expected to defend their position and continue to restrict funding to SMEs,” he said.
“Small businesses must pay greater attention to managing cashflow and locating alternative funding such as invoice financing to avoid falling into arrears with their suppliers, banks and the Australian Tax Office,” he said.
Australian Banking Association chief executive Steve Munchenberg was quoted earlier this week as saying: “After nearly two years of difficulty there will be … circumstances where the banks say ‘we are no longer able to support these businesses’. That’s what we would expect coming out of an economic slowdown.”
Australian Taxation Commissioner, Michael D’Ascenzo told a business forum this year that a struggling business might show early signs of trouble by lodging late or increasing its debt. “When we see this we contact the business and offer our assistance. This financial year we have made over 5,500 assistance visits to businesses we identified as vulnerable, and are expecting to visit another 4,000 before the end of the financial year.”
Mr Charlwood said Bibby Finacnial Services is standing by its clients in these tough times and fees will remain unchanged.
Debtor financing can provide cash within 24 hours, allowing better control over the company’s cash flow to meet supplier invoices and wages and provide greater certainly for strategic planning and budgeting.