Earlier, the ASBFEO released the Affordable Capital for SME Growth report, which highlighted how small businesses struggle to access affordable growth capital and the need for SMEs to better engage their bookkeepers and advisers.
The report also raised eight recommendations outlining initiative to increase supply of capital, including establishing a Business Growth Fund, to focus on long term funding solutions for SMEs that have the capability to grow.
Further, it recommends establishing an Australian Government Guarantee Scheme where member banks can apply for a government guarantee to partially support a loan to SMEs with a strong business case but insufficient real estate or business assets.
Speaking to The Bookkeeper, Association of Accounting Technicians chief executive, Rochelle Park expressed her support for the recommendations and its potential impact for bookkeeping clients.
“[It is] a very good proposal supporting potential growth opportunities for small business with access to reasonably priced capital funds,” said Ms Park.
Similarly, the Institute of Public Accountants chief executive, Andrew Conway welcomed the findings of the report, backing the recommendations to boost the small business sector.
“The IPA congratulates ASBFEO for its comprehensive report on the plight of SMEs who struggle to grow their businesses due to the lack of adequate capital, finance and support,” said Mr Conway.
“A limited state-backed guarantee would encourage banks and other commercial lenders to increase loan finance available to small business at affordable rates. Access to responsible and affordable finance will help many small businesses reinvest in their businesses and help create new ideas, new capacity and new jobs.”
Apart from the supply side recommendations, the ASBFEO report also highlighted the need for adviser, including bookkeepers, to work closely with their SME clients to help prepare them to be finance-ready.
“SMEs should keep their trusted advisers — accountant, bookkeeper, lawyer or business adviser — up to date with business plans, so any advice given is relevant to financing needs and future growth,” the report said.
“A key factor in successfully obtaining capital is the quality of a credit funding application, which is dependent on the SME demonstrating their credit worthiness — having current business plans, cash flow forecast, demonstrable profitability and a track record of paying bills on time.
“SMEs need to be aware that stretching payment to creditors, such as the Australian Taxation Office, may be seen by a financial provider that the business is not able to meet its debts on time.”
Jotham Lian is the news editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.