Almost all small to medium sized businesses in both Victoria and NSW are feeling the pinch of tighter cash flows as the credit crunch dries up the funds needed for business to function, a report said today.
In Victoria, 94% of small business owners and managers say they are often concerned about cash flow for their business, with 86% saying the worries have affected their home life, according to the National Australia Bank's SME Cash Flow Study.
In NSW, a similar number - 93% - said they were frequently stressed about cash flow, while 63% of business owners have taken a pay cut as a result.
More than half of Victorian small business owners have taken a pay cut as a result of the turmoil in global financial markets.
''SMEs do not have the safety buffer enjoyed by many large organisations during tight economic times," said NAB state general manager of Victoria Kevin Potter in a statement.
"The key trigger points for stress this study has identified include chasing payments from late or non-paying customers, sorting out taxes at the end of the year and being hit by unexpected bills."
Businesses have been forced to hold on to their cash longer in recent months as credit crunch has made the funds needed for daily transactions more scarce.
The number of days it takes Australian businesses to pay their bills increased over the past three months, slowing the overall pace of the economy and nudging it closer to a recession.
The average payment terms for all businesses were 55.2 days in September, a four-day jump over last year at this time, credit reporting agency Dun and Bradstreet said earlier this month.
Four out of ten Victorian small businesses report cash flow issues creating stresses on their relationships with customers, the NAB report said. Two-thirds have denied credit to late paying customers.
Following a summit held in Queensland last week to discuss cash-flow woes facing small businesses, Prime Minister Kevin Rudd guaranteed on-time payments to SMEs which have Federal Government contracts up to $1 million.
czappone@fairfax.com.au
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