Nearly 80 percent of Australian small to medium businesses (SMBs) have experienced cash flow problems in the last 12 months, with 27 percent of owners forced to dip into personal savings, skip paying themselves a salary, or do both.
These findings come from a new survey commissioned by Commonwealth Bank and conducted by the University of New South Wales (UNSW).
The university’s Sydney Business School asked 507 business owners how they were faring between Oct. 31 and Nov. 5, 2024.
The most common factors impacting cash flow were declining revenue (35 percent), low cash reserves (30 percent), and seasonal fluctuations (27 percent).
However, the majority (85 percent) had one or more strategies to manage the situation, such as reviewing or decreasing expenses (34 percent) or maintaining a cash reserve (27 percent).
Some were focused on finding additional revenue streams (26 percent) and increasing sales and or prices (25 percent).
According to CBA Executive General Manager of Small Business Banking Rebecca Warren, cash flow strategies are important for long-term business success.
“For small businesses, 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,” she said.
“It’s not surprising that the economic challenges of the past year have resulted in cash flow impacts for many Australian SMBs.
Increased Business Failures
In response to these challenges, Commonwealth Bank and the university have developed a tailored, free online course to help Australian small business owners better understand and optimise their cash flow.This course is available to all 2.5 million small businesses in Australia, regardless of whether they are Commonwealth Bank customers.
The survey also revealed that 53 percent of business owners wanted to take a business management course or receive further training.
Business failures last year reached the highest level since the pandemic, according to CreditorWatch data.
In November 2024, the failure rate reached 5.04 percent—up from 3.97 percent in October 2023.
The company attributed this increase to higher prices impacting not only consumers but also businesses—particularly higher electricity, insurance, and rental costs—along with an aggressive approach by the ATO to collecting outstanding tax payments.
Food and beverage was the sector worst affected, with an 8.5 percent failure rate.
CreditorWatch forecast that this would rise to 9.1 percent in 2025 as consumers continued to restrain discretionary spending.
From a regional perspective, Western Sydney and Southeast Queensland were at the highest risk of business failure, while the lowest risk regions were concentrated around inner Adelaide, regional Victoria, North Queensland, and the northern suburbs of Sydney.
