Eight in Ten SMEs Have Cash Flow Problems. Most Don't Know Why.

A 2024 survey of 507 Australian small and medium business owners, conducted by CommBank in partnership with UNSW, found that nearly 80% had experienced cash flow impacts in the previous twelve months. NAB’s quarterly SME survey reinforces the finding: cash flow remains the primary concern for 43% of small businesses heading into 2025.

These numbers aren’t surprising. What’s more revealing is what business owners say is causing the problem — and what they’re doing about it.

The reported causes

According to the CommBank research, the most commonly cited factors impacting cash flow were declining revenue (35%), low cash reserves (30%), and seasonal fluctuations (27%).

These are descriptions of symptoms, not causes. Revenue doesn’t decline without reason. Cash reserves don’t deplete spontaneously. Seasonal fluctuations are predictable.

The gap between experiencing a cash flow problem and understanding its origin is where most small businesses get stuck. They know something is wrong. They can feel the pressure. But they can’t point to the specific driver — which means they can’t fix it.

The response patterns

The survey found that 85% of businesses have implemented specific strategies to manage cash flow. The most common responses were reviewing or decreasing expenses (34%), maintaining a cash reserve (27%), finding additional revenue streams (26%), and increasing prices (25%).

These are reasonable tactics. But they share a common characteristic: they’re reactive. They address the immediate pressure without diagnosing the underlying cause.

Cutting expenses can help — unless the problem is revenue mix. Building reserves is prudent — unless your operating model consumes cash faster than you can accumulate it. Adding revenue streams sounds smart — unless your margins are negative and you’re scaling losses.

Without clarity on what’s actually driving the problem, these strategies become guesswork.

The visibility gap

The real issue isn’t cash flow itself. It’s the inability to see where cash is going with enough granularity to act.

Most small businesses have accounting systems that tell them what happened — revenue last month, expenses last quarter, profit at year end. What they lack is operational insight: which customers are profitable, which services generate margin, where time is being spent relative to what’s being billed, and how current commitments will affect cash in 60 or 90 days.

This isn’t a technology problem. The data usually exists somewhere — in accounting software, project management tools, bank feeds, invoicing systems. The problem is that it’s scattered, inconsistently captured, and never synthesised into a view that supports decision-making.

The compounding effect

Poor cash visibility doesn’t just cause immediate problems. It compounds over time.

Consider tax debt. The ATO reports that small businesses owe over $35 billion in collectible debt — roughly two-thirds of the total tax debt book. Much of this accumulated during the pandemic when the ATO paused enforcement and many businesses treated deferred tax as working capital.

That debt didn’t appear suddenly. It built up quarter by quarter, BAS by BAS, while owners focused on immediate operational pressures. By the time it became a crisis — when the ATO resumed enforcement — it was often too large to address without restructuring.

The same pattern plays out with late payments. CreditorWatch data shows that 96% of large businesses and 74% of small businesses have experienced late or overdue payments. One in five SMEs lose between $6,000 and $30,000 annually from late payments alone. Each late payment strains cash flow, but the cumulative effect over months and years can be existential.

The infrastructure question

When we work with businesses experiencing cash flow pressure, the first question isn’t “how do we fix cash flow?” It’s “can you show me where your cash is actually going?”

Usually, the answer is no — or at least, not with the speed and precision required to make good decisions. The owner has a general sense. The accountant has historical numbers. But nobody has an operational view that connects activity to outcome.

Building that visibility is foundational work. It’s not glamorous. It doesn’t feel strategic. But without it, every decision about cash flow is a guess.

The 80% of businesses reporting cash flow problems aren’t lacking effort or intelligence. They’re lacking the infrastructure to see what’s actually happening — and that’s a solvable problem.

Sources

CommBank/UNSW SME Cash Flow Survey 2024; NAB SME Business Survey Q3 2024; ATO Annual Report 2024; CreditorWatch Business Risk Index; GoCardless SME Payments Research 2024.

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GBN Partners

The numbers that matter are the cheat sheet for the activities that count.