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INDUSTRY INSIGHT TIME TO TAKE STOCK The second wave of lockdowns in Victoria will have a lasting impact on the economy, but sadly, many small businesses will pay the ultimate price. By Australian Small Business and Family Enterprise Ombudsman Kate Carnell AO. Modelling by Deloitte Access Economics suggests about 240,000 small businesses nation- wide are at risk of failure. Adding to that grim picture are the latest CreditWatch figures showing payment times are 224 per cent longer than in July last year, which means liquidity is drying up. And while the number of businesses entering administration over the past few months has been at historic lows, this has been largely attributed to the temporary government measures brought in to protect businesses from creditor action during the Covid crisis. It’s in the best interests of small businesses to focus on their financial position now and to plan ahead for what happens when the support measures, such as JobKeeper, stop and bills start coming in again. Small businesses, if they haven’t already, should be making it a priority to sit down with their trusted, accredited financial adviser to develop a tailored plan for their business. Those small businesses with cashflow issues, compounded by falling revenue, may be putting off getting the professional advice they need because it costs money they don’t have. The snowball effect of this could be devastating, both for the business owner and family, as well as the staff. As part of our recently released Insolvency Practices Inquiry, we recommended the establishment of a small business viability voucher program, where small business owners facing financial stress would be able to obtain a voucher valued up to $5,000 to access advice from an accredited professional on how and whether to turn around their business. Under the program, a business owner (or their accountant or bookkeeper) would apply for the voucher, with services provided by a relevant accredited professional. The accredited adviser would be paid 34 CONVENIENCE WORLD SEP/OCT, 2020 this crisis, they need access to funding. While changes to the SME guarantee scheme increasing the loan terms from three to five years were a step in the right direction, revenue-contingent loans are more appropriate. These loans would operate similar to HECS, with payments to be made when revenue exceeds an agreed amount. These are unprecedented times. Small businesses, particularly those in the Victorian lockdown and those affected by border closures, are at the mercy of these restrictions, which are out of their control. We think there’s more to be done in terms of facilitating greater access to funding. However, it’s also really important for small businesses to be fully prepared when they seek funding, to give them their best shot at success. The Finance Fit Checklist (shown here) included in our Business Funding Guide is a good snapshot of what lenders require from small-business borrowers. It’s time to take stock. "Small businesses, if they haven’t already, should be making it a priority to sit down with their trusted, accredited financial adviser to develop a tailored plan for their business." About Kate Carnell AO Since being appointed Australian Small Business and Family Enterprise Ombudsman in March 2016, Kate Carnell has been a powerful advocate for small business. The Ombudsman has provided direct support to thousands of businesses involved in disputes. She has served as CEO of the Australian Chamber of Commerce and Industry, which represents 300,000 Australian businesses, and was awarded an Order of Australia for her service to the business sector. Australian Small Business and Family Enterprise Ombudsman’s office The ASBFEO's role is to support small businesses and family enterprises to enable them to grow and thrive. The ASBFEO was launched in 2016 and has two key functions: to assist and to advocate for small businesses and family enterprises. directly by the government, up to the value of the voucher. This would give small businesses access to expertise in judging if the business is viable, to help make an informed decision about whether turnaround is possible, or exit is the right decision. Getting this tailored plan is critical to the survival of many small businesses. Equally, access to finance continues to be an issue for small business. Too many small businesses are being knocked back for unsecured loans under the government’s SME guaranteed loan scheme. These loans are 50 per cent underwritten by the government, so should be easier to access for SMEs. Unfortunately, the major banks are imposing unrealistic serviceability requirements on small business borrowers. Ultimately, the program needs to be fit for purpose for SMEs. For small businesses to get to the other side of