Australian importers, exporters and manufacturers entered 2026 hoping global supply chains had settled after several years of pandemic-era disruption. Instead, a new mix of regional conflict, fuel volatility, global tariffs and currency swings have reshaped costs and lead times for tens of thousands of businesses – often stretching the time SMEs wait between paying suppliers and collecting revenue from customers.
For supply-chain exposed businesses, resilience starts with a funding structure that matches their actual trading cycle today, not the one that may have existed in smoother economic times.
Disruption Has Moved from Exception to Standard Operating Condition
The key shift for SMEs is not simply that costs are higher than they might have been six months ago. It’s also that the amount and timing of funds needed to secure stock has become harder to predict. A quick scan of the June 2026 ABS Business Conditions and Sentiments survey reveals the cash flow pain that is being felt right across our economy.
- 73% of Australian businesses – almost three in every four – reported being negatively affected by fuel prices or availability.
- Around half of those reported higher operating expenses in the previous four weeks, with fuel prices cited by 71% of those businesses.
- Some sectors were particularly hard hit: 84% of manufacturers and wholesalers, 82% of retailers and 88% of transport, postal and warehousing businesses reported a negative fuel impact.
Supply disruption was also widespread. One in six Australian businesses was experiencing disruption in June, rising to 28% of manufacturers, 27% of wholesalers and 22% of retailers and construction businesses.
For those affected, the impact was not limited to higher freight invoices. Delayed inputs can interrupt production, postpone sales and increase storage needs and costs. That all adds up to more cash tied up in goods that may be stranded offshore or in transit.
Peak Trading Magnifies the Timing Gap
For businesses preparing for Black Friday, Christmas and other peak trading periods, the central issue is timing. Stock may need to be ordered and paid for months before it is sold. Freight delays can extend the wait, while customers may still expect 30, 60 or 90-day payments terms after delivery.
A business can therefore be profitable on paper and still face a serious working capital shortfall. The more stock it carries and the longer the cycle becomes, the more cash is unavailable for wages, superannuation, rent, tax and the next supplier order.
Higher Landed Costs Put Margins and Cash Flow Under Pressure
The latest national pricing data further demonstrates how quickly a regional or global geopolitical shock can travel through the Australian economy. The ABS Import Price Index rose 5.7% in the June quarter and 6.2% over the year. Unsurprisingly, there were pockets of much steeper price escalation:
- Petroleum prices rose by 47%
- Fertiliser prices increased by 25%
- Plastics in primary forms rose by 26%.
The ABS linked these movements directly to the closure of the Strait of Hormuz, export restrictions and the flow-through of higher oil and petrochemical costs.
The problem for many businesses, particularly smaller SMEs, goes beyond price hikes. Unless they hold a dominant market position, they generally don’t have enough pricing power to pass those costs on immediately.
In June, 44% of businesses absorbed fuel-related increases, while only a tick over a third of that figure – 15% – raised prices. Agriculture, forestry and fishing (71%), Manufacturing (68%), and Construction (58%) were the most likely sectors to absorb the increase. This matters because every dollar of absorbed margin reduces the cash SMEs have available for the next payroll run, stock order or supplier deposit. And many businesses don’t have adequate cash buffers to absorb these increases for long.
Tariffs and Currency Add Another Layer of Uncertainty
Tariffs are another working capital red flag that more businesses now need to model.
A tariff doesn’t need to apply directly to an Australian shipment to affect an Australian SME. Tariffs can change the relative price of goods, redirect supply into new markets, or prompt suppliers to renegotiate terms. They can also alter the level of demand from customers exposed to the United States, China or Europe.
Currency movements too can either cushion or amplify price pressures. A stronger dollar can reduce the Aussie dollar cost of some imports. A reversal can increase supplier, freight and input costs before a business has repriced its finished goods. Exporters face the opposite equation: currency movements can improve competitiveness while changing the value of overseas receipts and the cost of imported inputs.
By early August, the Australian dollar trade-weighted index – a measure of the dollar’s value against a basket of major trading-partner currencies – was about 5% higher than at the start of 2026. It had, however, depreciated 1.2% since the RBA’s May Statement.
In assessing the health of their working capital position, the lesson for businesses involved in global trade is that they should model the whole landed cost and currency conversion cycle, rather than relying on a fixed exchange rate assumption or supplier quote.
SMEs Are Already Changing Their Response
ScotPac’s latest SME Growth Index Report clearly shows that supply chain concerns are growing. Rising input and supply costs is now the leading cash flow pressure for SMEs, nominated by 19% of businesses. Geopolitical conflict and supply chain disruption were also identified by 12% of SMEs as their biggest external risk to revenue growth.
In response, almost half of all SMEs interviewed plan to secure more flexible supply-chain funding over the next 12 to 18 months. A further 31% intend to move closer to key suppliers and customers, while 23% plan to shorten their supply chains or reduce complexity. These are all sensible responses, but they often require an upfront cash investment at a time when cash flow is already under pressure.
Trade Finance Role
Trade Finance is one solution – or part of a broader solution that could also include Invoice Finance and other products – that businesses dealing with overseas suppliers may consider. It is designed around the gap between paying a supplier and receiving cash from an eventual sale. It can support the purchase of stock, inventory and raw materials from domestic or overseas suppliers, with repayment structured around the trade cycle rather than treated as a fixed loan.
That distinction becomes important when supply chain disruptions lengthen lead times. Paying a supplier earlier or ordering more stock may make commercial sense, but it can weaken day-to-day liquidity if funded entirely from cash reserves. A tailored finance solution can help to keep orders on track while preserving working capital for the rest of the business.
One key caveat to observe is that Trade Finance does not remove commercial risk. Businesses still need realistic demand forecasts, disciplined stock management, sensible foreign exchange arrangements and confidence in their suppliers and customers. It can, however, ensure that a timing mismatch does not become the reason an order is delayed or declined.
How ScotPac Can Help
ScotPac has more than 35 years’ experience supporting Australian SMEs through changing economic and trading conditions. Our specialists work with importers, exporters, wholesalers and manufacturers to understand the full operating cycle – including supplier terms, stock lead times, customer payment cycles and currency requirements.
For eligible businesses, ScotPac can support domestic or overseas supplier payments for stock, inventory and raw materials. Teamed with Invoice Finance, it can support both sides of the cycle: funding purchases before goods are sold and releasing cash from receivables after invoices are issued.
In a period when disruption can change input costs and supply lead times with little notice, it is not possible to predict every shock. However, it is possible to build greater working capital flexibility that can make stock decisions and supplier relationships easier to navigate.
Talk to your broker or contact ScotPac directly to learn more.
Five Checks Before Committing to New Stock
So, what should businesses reliant on overseas trade or inputs be doing to improve their position? The following checklist provides a good starting point.
- Map the full cash cycle. Identify when deposits, supplier balances, freight, GST and other import charges fall due, then compare those dates with realistic sales and customer payment assumptions.
- Stress-test the downside.Model the effect of a freight delay, a weaker Australian dollar, a supplier price change and slower-than-expected sales. The test should show the maximum funding gap, not only the average case.
- Review supplier concentration and terms. Assess whether a critical input or product depends on one supplier or one part of the world. Explore alternative suppliers and documentation that guarantees appropriate protections.
- Separate stock funding from operating cash. Using all available reserves to buy inventory can leave the business exposed when payroll, tax and other commitments arrive. Preserve an appropriate liquidity buffer.
- Arrange facilities before urgency sets the terms.Finance is more useful when it is in place before orders are due. Early planning provides more time to assess affordability, security, and how repayment will align with the expected sales cycle.
For brokers and advisers, this checklist can be used in client conversations or discovery sessions. In some cases it may reveal a funding need a business had not yet considered.
