On top of this, the research reveals that 54 per cent of SMEs say they are likely to need to invest further into their business in order to generate future cash flow.

And, despite an overall downward trend in sentiment among SMEs which reflects these concerns, short-term business confidence continues to improve, reaching a 12 month high in December 2023 as 37 per cent of SMEs express high confidence in their five year outlook.

The research also reveals that economic and supply chain conditions remain the biggest concern for businesses, with over half (59 per cent) of SMEs experiencing supply chain cost increases as a direct result of recent changes to economic conditions.

Labour pressures are also front of mind as businesses balance their books, with over half (53 per cent) battling rising labour costs as a result of a tightening economy, and a further 42 per cent claiming they would struggle to find replacements if any current staff were to leave the business.

“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," said Prospa Chief Revenue Officer, Beau Bertoli.

“High fuel and material costs combined with growing public frugality have disproportionately impacted the hospitality, retail and wholesale and warehousing industries. 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.”

Prospa announced that it has partnered with Xero to simplify business finances by integrating the Prospa Business Account with Xero, noting that Xero provides SMEs with cash flow clarity, bringing their financial insights together in one up-to-date view and syncs transactions automatically, eliminating the need for manual input.

“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,” said Beau Bertoli. “SMEs can gain greater peace of mind and save valuable time as transactions sync automatically, allowing business
owners to manage their finances from anywhere.”

The partnership with Xero follows Prospa’s acquisition of the Zip Business loan portfolio, and a broader strategic partnership with Zip to help support more than 30,000 merchants with tailored business finance.

Prospa says the strategic partnership will see it become the preferred financing partner for Zip’s growing portfolio of merchants across Australia and New Zealand, “giving them streamlined access to Prospa’s tailored small business lending solutions to support their cash flow and other finance requirements”.

“With Prospa, small businesses will be able to quickly get approval for small business loans up to three years or lines of credit, and a Prospa Business Account, suited to their needs. Their tailored financing solutions are designed to help them at every stage of their business, from making their first stock order to investing in technology to streamline business operations,” said Bertoli.

“Our strategic partnership with Zip is a significant step forward in expanding our reach and capacity as Australia’s number one online lender to small business, and crucially will enable us to expand our impact on the small business community as they continue to navigate an increasingly turbulent economic climate.”