With many Asian manufacturers suspending their operations due to the spread of the coronavirus, businesses at home are faced with an unprecedented challenge. Industries that rely on imported materials and products from China are scrambling to deal with interruptions to their supply chains. For some, that means finding alternative suppliers, while others seek to stockpile what they need to get through the crisis.
Cybersecurity is an issue that affects every internet user, and every business that operates on the web. Despite this, many businesses do little or nothing to protect themselves, or their customers, from cybercriminals, leaving them exposed.
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell issued a statement on 12 February 2020, saying that big businesses continued to flout reasonable payment terms to smaller suppliers. If this continues, she indicated, she will recommend federal legislation requiring all businesses to be paid within 30 days of invoicing.
Cash flow interruptions are frustrating, time consuming, and expensive problems that every business struggles with to some degree. Unexpected costs and late payments are common problems, and become more common as a business grows and becomes more complex, and as it works with more and more clients. Because of this, managing cash flow perfectly—so that working capital is always on hand when it’s needed, but isn’t left simply sitting around—is virtually impossible. Businesses are inevitably left short on working capital, and are forced to scramble for solutions by reshuffling budgets, chasing late payments, or cutting funding somewhere else.
Hot on the heels of the bushfire crisis, fears of a global coronavirus pandemic are having serious effects on businesses. Prime Minister Scott Morrison announced a travel ban for anyone who has been in China in the past 14 days. This has effectively put a halt to all Chinese tourism to the country, as well as shutting out over 100,000 Chinese students who were to return to study in Australia.
Our telecommunications services are dominated by big businesses, which, in some areas, operate as near-monopolies. This is because our phone and internet services rely on massive, complex, and expensive infrastructure. New businesses can often never seriously challenge major established competitors, because they can’t afford to build their own infrastructure. Instead, budget services often rent low-priority bandwidth from networks owned by larger competitors. This, more than any other factor, is what makes the success of GoTenna, founded by Daniela and Jorge Perdomo, so remarkable.
The AiG Australian Performance of Construction Index declined to 38.9 in December 2019, marking a fall to its lowest level since May 2013. Activity in the construction industry has contracted for 16 consecutive months. This is surprising, as the housing market has recovered well since the crisis in July of 2019. The soaring home values marking the recovery are expected to boost real estate investment, however orders for new houses and apartment units, as well as commercial construction projects have continued to drop. According to experts, this is the result of low consumer and investor confidence in recent months, spurred on by economic uncertainty at home and abroad.
Research by ANZ and Roy Morgan has found that, since 2014, Australians have decreased their reliance on debt, while also saving more of their earnings. Reflecting this, the ANZ Roy Morgan Financial Wellbeing Indicator rose from 57.4 to 59.7; a 2.3 per cent increase. Today, consumers are saving 36 per cent more than they did 5 years ago, with median savings peaking at $5,580 in 2019.
Making the leap from a small or medium sized business to a large company, competing for industry leadership, requires a great deal of planning, organisation, and investment. Many businesses are, unfortunately, more concerned with getting growth capital than they are with finding the right investors for their business.
Short term financing tools, such as invoice finance and supply chain finance, are an excellent way to improve cash flow management and reduce the impact of cash flow interruption. However, they’re also useful as a way to generate temporary capital to drive short term growth, or to free up capital in the long term for more significant investments. Driving growth in this way comes with its own risks, however, and needs to be approached with care.