Four ways small and medium businesses can weather the cost of living storm

Australia is in the grips of the fastest increase to inflation rates in a generation. Weather conditions, supply chain disruptions, the continuing COVID-19 pandemic and international pressures are raising the cost of groceries, fuel and accommodation, while wages remain stubbornly stagnant.

No-one needs to be told how tough the economic climate is at the moment, least of all owners of small and medium businesses.

With many Australians changing their spending habits to cope with the rising cost of living, businesses are also feeling the pinch.

Luckily, there are a number of tools and resources available for this crucial sector of the economy, to support SMEs through the number of challenges they may be grappling with.

1. Know what support you can get, and how to find it

Business owners are consumers too, and in addition to grappling with rising mortgages, eye-wateringly expensive fuel prices and rising grocery prices, the cost of doing business is also getting more expensive for SMEs.

Businesses are left with a difficult decision — bear the grunt of increasing input costs or increase their prices when they’re customers passing costs onto customers, who are already struggling to keep up with the status quo, and lose their competitive edge, squashing their potential for growth.

The good news is that SMEs don’t need to do it alone. For businesses facing difficult times or struggling to take the next step in their growth journey, there are a range of government grants, benefits and rebates available, but the challenge can be knowing how to find them and how to apply.

CommBank’s Benefits finder* tool helps businesses identify and apply for government grants and rebates they may be eligible to claim to help ease everyday costs or recover from a setback. By logging onto the CommBank app^ or NetBank and answering a few questions, businesses can quickly and easily see what support is available, and how to make a claim.

2. Learn how to manage cash flow woes

The effect of the cost of living crisis on consumer spending can have a dramatic effect on cash flow. Issues with cash flow can hit SMEs in a variety of ways. Aside from rising input costs, cost of living pressures hitting consumers mean that businesses may need to consider paying their employees more, or risk also being faced with a workforce shortage.

When facing difficult times and an environment of rising costs, understanding your cash flow, particularly your cash conversion cycle is vital.

Your cash conversion cycle is how long it takes to convert income into actual revenue. Knowing your cash conversion cycle will help you understand the position your business is in, and help you deal with current circumstances or even give you a better grip on your current situation if you’re considering if it’s the right time to grow.

Resources that help you track your cash conversion cycle like CommBank’s app-based Business Cash Flow tool**, will help you keep your finger on the pulse and improve the management of your business by giving you better visibility over your finances and operations, including how much money you have coming in and going out.  

3. Understand how to optimise your cash flow

In the perfect storm of economic instability hitting SMEs right now, many are understandably more cautious than they may usually be, unsure if it’s worth the risk to invest in growth while for others, the biggest question is whether they can remain viable in their current state.

Tools like CommBank’s Daily IQ^^ can help SMEs see valuable insights about their current performance and identify opportunities for improvement and growth by providing insights tailored to your business.

Gaining understanding of your customers, their spending habits and your spending trends allows you to optimise your cash flow and improve your operations.

4. Plan ahead for difficult times

When experiencing financial strain including potential payroll increases and rising operating costs, it pays to plan ahead by being in control of your upcoming bills and payments.

Knowing what money will be going out will make it easier to plan and stick to a budget, and CommBank’s Bill Sense*^ can help prevent you from feeling overwhelmed by showing you upcoming payments up to 12 months in advance, as well as what you’re spending on bills every month.  

Taking advantage of the latest offers available on your overhead expenses can also help ease some of the pressure, with discounted business nbn™, mobile and phone plans available through More – now offering eligible businesses 30% off^* for their first 12 months. 

Achieve more in business with CommBank

When it comes to managing your way through a cost of living crisis, it’s all about knowledge — understanding the current state of your business and the day-to-day factors that are affecting it. 

CommBank makes everyday business banking easier by giving you greater control, services and tools to start, run and grow your business.

Visit commbank.com.au/business to learn more. 

Read now: The digital experience your customers expect

Things you should know:

This article has been prepared without taking into account your individual or business needs and objectives. You can view the Terms and Conditions for Business Transaction and Savings Accounts, our Financial Services Guide and the Electronic Banking Terms and Conditions and should consider them before making any decision about these products and services. Bank fees and charges may apply.

* You can access Benefits finder through the CommBank app or NetBank. To use Benefits finder, you’ll need to have an account with us and be registered for NetBank.

^ The CommBank app is free to download, however your mobile network provider charges you for accessing data on your phone. Terms and conditions are available on the app. NetBank access with NetCode SMS is required. Find out about the minimum operating system requirements on the CommBank app page.

** Business cash flow is a tool for general information only and should not be solely relied on to make business, accounting, financial, tax decisions or to reconcile your accounts.

^^ Daily IQ has been prepared as a research tool for general informational purposes only and should not be relied on to make business decisions or for account reconciliation. The information may be incomplete or not up to date and may contain errors and omissions. Any projections and forecasts are based on a number of assumptions and estimates, including future events and contingencies, which may be inaccurate. Daily IQ is available to business customers with a CommBank Business Transaction Account.

*^ For Bill Sense, we predict your bills based on patterns in your transactions, how much you pay and when. See ‘Bills and payments’ in the CommBank app Terms and Conditions for full details.

^* Offer of 30% off a More business nbn™ plan, SIM-only mobile plan and/or business phone plan for 12 months is for customers who sign up to either a 24 month contract or no contract option by 31 December 2023 and use a CommBank Debit or Credit card as their bill payment method. Offer applies individually to each eligible service activated by this date. Offer does not apply to other More services, including Business Ethernet, Enterprise Ethernet NBN or Business Fibre 1000. Offer cannot be used in conjunction with any other offers or discounts. 12 months is a promotional period commencing on the day your eligible service is activated. After this, the cost of your plan will revert to the Recommended Retail Price (RRP) current at that time. The RRP of More nbn™ plans are subject to change in accordance with More’s terms of service. If you take up this offer on a no lock-in contract, you are free to cancel at any time without charges, but cancelling your service within the 12 month promotional period will forfeit any remaining months discounted at 30% off. Offer applies to monthly plan fees only and does not apply to any hardware charges not included in the plan, hardware installation charges, nbn™ New Development Fee or New Copper Pair charges or any fees for services or usage outside of plan inclusions.

The target market for these products can be found within the product’s Target Market Determination.