Rate rise set to bite small business
NEARLY a quarter of Queensland small businesses say another rate rise will affect their profitability, according to a Suncorp survey.
Peter Larsen, Suncorp executive general manager small business banking, says smaller enterprises are usually the first to feel the effects of an interest rate rise as they're often working to tighter margins.
"It's important small business owners fully understand their finances and are aware of the funding options available to them to help minimise the impact of rate rises," he says.
"For example, don't let cash lie around earning little or no interest. If you have a business loan, use a business offset account to minimise the amount of interest paid on the loan.
"Otherwise, sweep the funds from a cheque account into a linked high-interest account. Use the linked high-interest account to make electronic payments such as payroll."
Mr Larsen says businesses worried about further interest rate rises should also consider locking in their rate.
"There are some very competitive fixed rates out there and now's the time to shop around and find one which meets your needs," he says.
Speeding up your cash flow to minimise interest paid or maximise interest earned is another way to cushion the blow.
"If you have an EFTPOS terminal in your business, make sure your provider settles every day of the week," Mr Larsen says.
While 22 per cent of small business owners surveyed said an interest rate rise would have a negative impact, they were less worried about the impact on staff recruitment (7 per cent) and borrowing money (5 per cent).
