Aussies dip into personal savings as cash flow problem plagues small businesses, CommBank report shows

Australian small businesses have a serious cashflow problem, a CommBank report published on Thursday reveals.

Nearly 80 per cent of small to medium businesses (SMBs) have experienced an impact to their cash flow in the last year.

Declining revenue (35 per cent) was the most common factor, followed by low cash reserves (30 per cent), and seasonal fluctuations (27 per cent).

In the last year, more than a quarter of the business owners also dipped into personal savings, did not pay themselves a salary, or both.

But CommBank small business banking executive Rebecca Warren said these strategies “may not be what’s best for the business or the business owner for the long term”.

Impacted business owners have also been trying other ways to solve the problem.

“The vast majority (85 per cent) of surveyed businesses employ one or more specific strategies to manage cash flow,” Commbank said.

Reviewing or decreasing expenses, maintaining a cash reserve, finding additional revenue streams, and increasing sales and/or pricing, are some of these strategies.

But these proactive steps might not be enough for SMBs to sustainably manage their finances.

Business Queensland, which also offers cash flow advice for SMBs said: “Even profitable businesses can fail if cash flow is not managed properly.”

“If you don’t have enough money to pay your lenders or suppliers, banks may foreclose and suppliers may end contracts.”

Warren added that success “often hinges on a delicate balancing act as they constantly juggle various aspects of their operations, from managing customers and employees to dealing with suppliers and vendors”.

“It’s not surprising that the economic challenges of the past year have resulted in cash-flow impacts for many Australian SMBs.”

Free cash flow course for Australians

There are 2.5 million small businesses in Australia, and each of them can access a free Cash Flow Management course designed to help them confidently optimise their cash flow.

More than half of surveyed business owners expressed a desire to undertake a course or training to help with business management, CommBank said.

The tailored course is the product of a partnership between University of NSW Sydney Business School and CommBank.

Course participants do not need to be customers with the bank to access the expert advice, strategies, and easy-to-use tools it offers.

The Cash Flow Management course is available online, so participants can learn at their own pace.

Those interested in the course can learn more about it, and enrol, by visiting the UNSW enrolment page.