"There are many pressures on businesses and most of them are not going to disappear, even with a second rate cut that economic commentators expect from the Reserve Bank of Australia," he says.
"Interest rates have been increasing for the past seven years to rein in the economy. It will take several more rate cuts over the coming 12 months before pressure eases on small and medium size enterprises, so business can expect a difficult 18 months," he adds.
Bank loans and overdrafts remain tight in the wake of the international credit crisis, and many SMEs are suffering a cash flow squeeze due to the majority of invoices being paid late. The average invoice payment time has blown out to around double the 30 day standard, with government departments and large companies being among the worst offenders.
Most retailing in Australia relies on imports and the sudden fall in the value of the Australian dollar recently, with a 200 basis point drop in one day, caught many importing businesses by surprise. Coupled with falling retail sales, this compounds the headache for small business, Mr Charlwood says.
Meanwhile, volatile fuel prices and full employment conditions in many industries add to the difficulties of managing small businesses. A further pressure for some small business owners is the softening property market, as many use mortgages over their homes and other property to raise business loans.
"In this environment we are likely to see record levels of business bankruptcy in coming months and rising unemployment.
"It is alarming that a recent CPA survey of 500 Australian small businesses with less than 20 staff found that 41% of businesses never prepare a cash flow forecast, 25% never pursue late payments and 70% don't prepare quarterly financial statements.
"To continue to prosper, businesses must be aware of the break-even point between rising costs and falling revenue and have their records and accounting up to date. They must be more diligent than ever in seeking payment of invoices, following up overdue accounts, and checking the credit status of any new customers," Mr Charlwood warns.
The credit crisis has pushed demand for Bibby Financial Services' cash flow solutions to record levels as small and medium size businesses and fast growing enterprises find it increasingly difficult to raise capital from traditional funding sources and manage lengthening payment times.
Bibby's factoring and discounting facilities help companies improve cash flow and gain additional working capital by converting up to 90 per cent of the value of each sales invoice into cash within 24 hours.
One of the key benefits is that real estate security is not required, meaning funding grows in line with sales and that business owners can free their family home from the business funding equation to minimize personal risk.
Bibby also provides an optional sales ledger management service, issuing statements, handling cash allocations, collecting outstanding payments and maintaining detailed accounts of the business' transactions.
