Why One in Five Australian Small Businesses Is Running on “E”

Australia’s small and medium-sized businesses (SMEs) are grappling with a major cash flow crisis that isn’t receiving nearly enough attention. Recent research reveals that over 21% of SMEs have no cash reserves at all, meaning more than one in five small businesses are operating without any financial cushion to weather disruptions. Even more concerning, nearly 80% of Australian SMEs experienced cash flow challenges in the past year, according to surveys commissioned by CommBank and supported by the University of NSW Business School.

The reasons behind this are clear. Data from CreditorWatch and other sources shows that 74% of small businesses reported being affected by late or overdue payments in the last 12 months, with industries like construction reporting rates as high as 92%. Late payments force business owners to dip into personal savings, hold off on paying themselves, or even skip critical investments to keep the lights on.

The scale of overdue invoices is staggering; more than $115 billion is currently owed to small businesses nationwide. This ongoing cash squeeze means owners spend hours every week chasing payments, impacting not only their bottom line but also their mental wellbeing and ability to grow.

Without reliable cash reserves and with so many late payments piling up, many SMEs are forced to make tough choices just to stay afloat. This is much more than a statistics story; it’s a real-world challenge affecting millions of hardworking business owners across the country. Addressing late payments and improving cash flow isn’t just a financial fix; it’s essential for protecting jobs, local communities, and the very spirit of entrepreneurship in Australia.

By Stephen Neli