SMEs face cashflow crunch amid rising costs
Small-to-medium enterprises (SMEs) across Australia continue to face significant headwinds in 2025 amid challenges driven by a combination of higher interest rates, a tight labour market and the increasing cost of doing business.
Recent insights from the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) underline the urgency of the issue. Ombudsman Bruce Billson noted a 50% increase in calls for assistance from distressed SMEs, many of whom fear insolvency due to unpaid invoices.
“Cashflow is the oxygen of enterprise,” Billson stated. “Difficult conditions mean that late payments can cascade through the supply chain, creating widespread financial stress.”
According to the Business NSW December 2024 Business Conditions Index, the top challenge of running a business in the current economic environment is financial management.
In fact, 39% of survey respondents said they were experiencing a longer time for customers to settle their invoices.
Earlypay is a leading provider of working capital finance to Australian SMEs with its invoice finance and equipment finance products. Earlypay CEO James Beeson echoed these concerns, emphasising that systemic late payment practices are straining SMEs’ cashflow.
“As SMEs face record corporate insolvency rates and increasingly strained cashflows, their founders and management teams are rightly focused on finding innovative financial management solutions that can provide the support they need to grow and thrive in challenging times,” Beeson said.
Earlypay is actively helping 2,000 Australian businesses mitigate these challenges, providing over $250 million in funding through invoice financing.
Invoice financing allows SMEs to secure funding against the value of their outstanding invoices, providing a much-needed alternative to traditional bank loans that often require real estate as collateral.
“Invoice financing smooths cashflow, enabling businesses to pay staff, suppliers, and invest in growth— all without relying on their personal assets like the family home,” Beeson said.
“Simply put, we’re providing Australian businesses with the cash they need to do better business.”
Invoice financing leverages unpaid invoices as a secure and viable funding option. Unlike traditional loans tied to property, this method keeps the financial risk within the business itself.
While still underutilised in Australia, invoice financing is well-established in markets like the US, UK, and Europe, where adoption rates are significantly higher. However, Australian SMEs are starting to embrace this alternative, recognising it as a lifeline in the current economic climate.
“Accounts receivable are one of the most underused assets on an SME’s balance sheet,” Beeson added.
“Invoice financing makes it possible to turn this overlooked resource into an accessible and impactful funding solution.”
Earlypay also integrates with platforms like Xero and MYOB, streamlining access to funds for SMEs.
“We were among the first lenders to integrate with accounting software, ensuring our clients get quicker and easier access to the funding they need,” Beeson added.
Earlypay’s invoice finance helps SMEs bridge the cash flow gap between issuing invoices and receiving payment from customers by providing early payment of unpaid invoices. Earlypay also provides equipment finance to SMEs to assist with capital expenditure.
Earlypay has been supporting Australian SMEs since 2001 and has built a trusted legacy of delivering reliable, flexible and innovative working capital finance.
