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Small- to medium-sized enterprises are expecting to have a decrease in turnover by the end of 2024, according to research from the lender.
New research from market insights provider RFI Global, commissioned by Prospa, revealed that 46 per cent of small- to medium-sized enterprises (SMEs) expect a decrease in turnover by the end of 2024.
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The research – which was released on 22 April – surveyed 518 SME operators between 20 December and 16 January, including owners, partners, managers, and directors.
Prospa revealed that 54 per cent of SMEs were likely to need to invest in their business to generate cash flow going forward.
The report found that short-term business confidence rose to a 12-month high in December 2023, according to the research, with 37 per cent of SMEs reporting high confidence in their five-year outlook.
Despite SME confidence levels, supply chain costs continue to be the biggest concern, as 59 per cent of SMEs reported experiencing increased supply costs.
More than half of SMEs (53 per cent) also reported that they were battling rising labour costs due to economic pressures, with a further 42 per cent saying they would struggle to hire replacements if they lost current staff members.
Prospa’s chief revenue officer Beau Bertoli said: “These findings demonstrate that while businesses continue to do it tough, Australia’s SME community is yet again proving its resilience by maintaining high confidence in their short-term outlook.”
Bertoli continued that hospitality, warehousing, wholesale, and retail had been “disproportionately” affected by higher fuel and material costs combined with “growing public frugality”.
Bertoli added: “However, as inflation begins to ease and with rate cuts on the horizon for later this year, with the right funding and support, the outlook for the Australian business community remains positive.”
The research comes as Prospa partnered with online accounting platform Xero, integrating the tech platform with Prospa Business Account, a transaction account to support SMEs manage cash flow.
Xero combines business financial insights on one platform, syncing transactions and therefore reducing the time taken to manually input transactions. According to Prospa, SMEs will be able to save time as Xero automation allows business owners to “manage their finances anywhere”.
Speaking on the partnership, Bertoli said: “With small businesses becoming increasingly time and resource-poor, it has never been more crucial to adopt simplified back-end processes and automate cumbersome admin tasks.
“SMEs can gain greater peace of mind and save valuable time as transactions sync automatically, allowing business owners to manage their finances from anywhere.”
In February this year, Prospa entered into an agreement to be acquired by a consortium led by investment managers Salter Brothers Tech Fund.
[Related: Prospa to be acquired]
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