Linden Toll

New research by SME Invoice Finance specialist Apricity has revealed that even healthy SMEs supplying larger companies are facing a cash flow crisis, caught between the twin pincers of a covid related slowdown, and longer dated trading terms.

A recent survey of over 900 commercial finance brokers has revealed that, even before the latest NSW and VIC lockdowns were in full swing, their SME clients were facing major cash flow challenges, with 77% indicating cash flow had significantly deteriorated over the first half of 2021.

When asked about the drivers of this cash flow ‘squeeze’, 77% were reported to be invoice related, of which 27% related to the imposition of longer trading terms. This finding corresponds with Apricity research from late 2020 which found almost half of brokers (45%) had seen their clients saddled with longer dated trading terms, despite what was, at the time, a rapidly recovering economy.

With SMEs continuing to struggle due to COVID related slowdowns, especially in locked down states, and with state and federal government business support being watered down relative to 2020, Apricity Finance CEO Linden Toll suggests that even healthy, growing businesses with strong balance sheets could be vulnerable, due to cash flow sequencing risk.

Commenting on the research findings, Mr. Toll said “60- and 90-day trading terms are tough at the best of times but are even more challenging at a time when nearly half the Australian population is under lockdown”.

“The infrastructure, construction and mining sectors may be relatively robust compared to others, but many of their smaller SME suppliers also supply other sectors, many of which are struggling. For these SMEs, the prompt payment of invoices becomes even more essential.

A lot of businesses who are ostensibly healthy and well managed, and who have lucrative contracts with government and some of Australia’s largest companies, may go to the wall simply because they can’t afford to wait 3 months after the work has completed to be paid,” Toll said.

Whilst many specialist, non-bank solutions exist specifically to help these types of businesses and solutions, many eligible SMEs are simply unaware they exist.

“Our recently released Small Business Funding research found that almost half (44%) of all SMEs were unaware of alternative funding sources available to help with these business challenges”, Toll said. “

There is also a reluctance to tap into traditional finance and overdraft solutions, which many SMEs perceive as too expensive and inflexible.” “We could see a longer-term sting in the tail for the economy if this type of scenario stifles the growth ambitions of SMEs and makes them reluctant to take on the big contracts”, said Toll.

“I urge SMEs facing these cash flow challenges to talk to their brokers as soon as possible and explore the wide variety of solutions available to help them accelerate their invoice payments and give them the confidence to keep growing.”

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Executive Director, Equiti Capital, Linden Toll welcomed Dr Hewson and said the appointment was an important step, one that will assist the company grow and execute its long-term business strategy.

“Dr Hewson is a very highly experienced economic, business and finance specialist and we are delighted to have him join us as Chairman,” he said.  “Not only is John a highly regarded economic strategist, he has significant networks across business, government and financial services, which we believe will help us build our business over the coming years.”

Equiti Capital is a property funds management business and part of the Equiti Group.   Equiti Capital launched its flagship fund, the Equiti U.S. Multifamily Property Fund earlier this year.  Mr Toll said Equiti Capital is currently in the final stages of securing its first US multifamily propertyinvestment and that further details of this investment would be announced shortly. 

 Dr Hewson has worked as an economist for the Australian Treasury (Census and Statistics), the Reserve Bank of Australia, the International Monetary Fund, the UN, and as an advisor to two successive Federal Treasurers and the Prime Minister. His academic career included 11 years as the Professor of Economics, four years as Head of the School of Economics at the University of New South Wales, and two years as Dean, Macquarie Graduate School of Management and Professor of Management at Macquarie University.

Dr Hewson’s political career spanned eight years as the member for Wentworth in the Federal Parliament. He was Shadow Finance Minister, Shadow Treasurer and Shadow Minister for Industry and Commerce and Leader of the Liberal Party and Leader of the Federal Opposition for four years.

Dr Hewson’s business career has included roles as a founding Executive Director of Macquarie Bank, a Trustee of the IBM Superannuation Fund, Chairman, ABN AMRO Australia and Member of its Advisory Council, and as a Director/Chairman of a host of public and private companies. Dr Hewson also chairs two charities, Osteoporosis Australia and KidsXpress. He also serves as Chairman of the Investment Advisory Committee of the Australian Olympic Foundation, and is a Member of the Trilateral Commission.

Dr Hewson is also employed as a Commentator by Sky News, comments widely on TV and radio, and writes a regular column in the Australian Financial Review.

 Dr Hewson said he was very pleased to join the Board of Equiti Capital.  “Equiti Capital is a young business, but one that I believe shows significant potential.  I think the US opportunities on which Equiti is currently focused, represents one of the strongest investment opportunities in today’s markets.   I am very pleased to be part of the future of this business,” he said.

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