With economic challenges expected to continue into FY24, businesses will need to keep a close eye on their income and expenses to maintain positive cash flow, as new research commissioned by Small Business Loans Australia reveals three-quarters of SMEs expect reduced cash flow before July next year.

Specifically, 30% believe their cash flow will be impacted because it will be harder to collect customer payments, while 26% said it will be harder to attract sales. A further 20% said both issues will impact their cash flow. The survey also found that 44% of respondents do not have a strategy in place to maintain cash flow during tough times.

Small Business Loans Australia sought to find out if fast-rising interest rates and inflation would impact small businesses’ ability and motivation to invest in themselves. More than one-quarter (29%) of respondents had not planned to invest in their businesses this financial year, while 40% will delay planned investments until conditions improve.

Indicating that the motivation to grow for many small businesses is directly linked to good economic conditions, 15% will cancel, or have already cancelled, investment in their businesses, while just 17% will continue investing.

Small Business Loans Australia founder, Alon Rajic said, “As Australian businesses continue to face the repercussions of the last two years, a significant proportion will have challenges, particularly without a savings buffer or strategy to help meet their expenses.

“One of the most effective ways to invest in, and protect, a business is to grow customers and sales – especially acquiring customers who themselves have healthy incomes and good cash flow. This could be a good time for small businesses to develop a strategy to not only survive, but to grow. Businesses often reduce costs when external conditions impact them, but then de-prioritise driving new sales. However, there are opportunities even in tough conditions.

“Growth often requires investment. Improving your product or service offering, getting in front of new customers, and customer loyalty will be important for many businesses who want to succeed in these times. For most, it will require financing.”