According to a recent report by Prospa, almost half (46%) of Small and Medium Enterprises (SMEs) in Australia project a dip in turnover by the end of this year due to prevailing economic pressures. An additional 54% of these businesses forecast that future cash flow generation will necessitate further investment into their enterprises.
The report was commissioned by Prospa, Australia's premier online small business lending platform, in collaboration with RFI Global. The study comes hot on the heels of recent data from the Australian Securities and Investments Commission (ASIC), which reported an unprecedented uptick in insolvencies last month with job numbers dipping by just 6,600. This subtle shift indicates that smaller businesses bore the brunt of the squeeze.
An upshot of the increasingly volatile environment is that 38% of SMEs are seeking support. Responding to this call for assistance, Prospa has forged a strategic partnership with Xero, with the objective of simplifying admin operations, saving time, and easing the journey of SMEs in the face of economic uncertainty. Beau Bertoli, Prospa's co-founder and Chief Revenue Officer, stated, "With small businesses becoming increasingly time and resource poor, it has never been more crucial to adopt simplified backend processes and automate cumbersome admin tasks".
The partnership between Prospa and Xero is aimed at simplifying business finances, and seeks to integrate Prospa Business Account with Xero. Xero, an accounting software platform, offers SMEs the ability to automate transactions. This eliminates the strain and error of manual input, and provides businesses with a consolidated, up-to-date financial picture. Bertoli remarked, "SMEs can gain greater peace of mind and save valuable time as transactions sync automatically, allowing business owners to manage their finances from anywhere".
This new collaboration follows Prospa’s acquisition of the Zip Business loan portfolio and a broader strategic partnership with Zip. The initiative aims to provide more than 30,000 merchants with customised business finance. As part of the partnership, Prospa will become the preferred financing partner for Zip's expanding merchant portfolio across Australia and New Zealand. This offers businesses swift access to Prospa's tailored lending solutions, which bolster cash flow and meet additional finance requirements.
This collaboration provides small businesses the option of obtaining approval for loans up to three years or for lines of credit swiftly. All approval processes will be carried out via a Prospa Business Account, refined to suit the business' needs. Bertoli commented, "Our strategic partnership with Zip is a significant step forward… it will enable us to expand our impact on the small business community as they continue to navigate an increasingly turbulent economic climate".
Bertoli concluded with optimism, stating that despite soaring fuel and material costs, alongside consumer frugality, industries like hospitality, retail, and warehousing have been hit hardest. However, as inflationary pressure begins to ease and with rate cuts forecasted for later this year, with appropriate funding and support, the scenario for the Australian business community appears promising.