Unlocking Growth in Australian SMEs
(23 November 2020 – Australia) East & Partners is pleased to share insights from a recent research initiative conducted with TIM Finance, a leading Invoice Finance provider in Australia, focused on unlocking growth in Australian SMEs.
TIM Finance recently completed a market survey with us to refresh their understanding of the state of the Invoice Finance market in Australia, especially in a post-COVID world, and the perceptions as they pertain to businesses making A$1.5M to A$50M+ in annual revenue.
Please see some snippets of the survey result below:
“Very useful way of supplementing our fixed borrowings and providing quick cash into the business.”
- Business Owner, $35-50m, Wholesale Distributor
“It’s a flexible way of financing our turnover; kind of matches our underlying trading quite nicely.
- Business Owner, $15-35m, Regional Transport Contractor
“Keeps our debtor days low and under control.”
- Company Accountant, $15-35m, IT Developer
Other insights in several key areas of business funding:
- Small businesses are becoming increasingly receptive to invoice finance and debtor finance solutions as a way to ease working capital requirements and access off-balance sheet lending, at very cost-effective rates, with no ned for property security.
- Key decision factors for SMEs to undertake an invoice finance facility include:
- Ability to not disclose the arrangement to their debtors (especially for larger businesses)
- Ease of onboarding
- Clear benefit statement / business case
- The benefits of utilising Invoice Finance are clear for the high number of businesses facing the challenge to refinance existing facilities at a time when many are fully drawn down, debtor days are lengthening, banks are not lending, and revenue challenges remain in place.
- Even before the COVID-19 crisis broke in March 2020, SMEs were being turned away on a frequent basis for new credit applications for an average value of A$1.9 million. This is expected to increase once government support cease in March 20201
- Personal guarantees remain a key barrier to funding approval, coupled with poor cash flow, onerous application documentation, outstanding ATO debts and credit history issues. All these factors can be overcome through sourcing appropriate Invoice Finance solutions to free up valuable working capital constraints.
We sincerely hope you find the analysis informative and interesting; you can find the full publication here