Home Accounting Software Cashflow problems drive Aussie SMBs into the red, says Xero

Cashflow problems drive Aussie SMBs into the red, says Xero

Many of Australia’s small businesses appear to be doing it tough, with a newly published report finding that just 50.7% of SMBs had positive cash flow as of June this year, with many operating in the red due to late payments.

According to the latest Insights report from accounting software provider Xero, late payments “crimped working capital” ahead of the financial year-end – that’s up from 48.9% a year earlier.

The inaugural Xero Small Business Insights, developed with support from global advisory firm KPMG Enterprise, also reveals that as large companies pledge to bring down payment times, small businesses are slowly, but surely, being paid sooner.

And, according to the report, invoices with 30-day payment terms were settled in an average of 36 days in June, down from almost 40 days a year earlier.

On employment, the report reveals that the number of employees on small businesses' payroll increased 1.3% month-on-month in June, which Xero says is faster than the ABS trend figure of 0.22% for all Australian employees.

Also revealed is that international trade for Xero small businesses fell slightly in June, with the total value of imports and exports sliding 2.6% month-on-month following a spike of 24.3% in May.

And, according to Xero, construction and professional services are leading the charge in adoption of its cloud accounting software to increase efficiency. Of the top five industries adopting Xero in the year through March 2017, construction made up the largest share at 32.7%.

“Xero has helped more than a million subscribers around the globe understand their financial operations better. Now, learning from a large sample of Australia’s 2.1 million small businesses, we can provide insights into their health for the benefit of those that interact with small businesses most,” says Xero Australia managing director Trent Innes.

“Policy and regulation is most effective when based on timely, accurate data. Xero Small Business Insights provides exactly that, based on how small businesses are performing every month, instead of every quarter or year.”

KPMG special adviser and demographer Bernard Salt said: “Xero Small Business Insights is a great leap forward. For the first time, it provides real insight into how the Australian small business economy is tracking.

“Traditionally, it’s been difficult to get aggregated data on small business because of the lack of centralisation. Now, thanks to Xero providing access to their deep analytical insights, enterprise and government will have greater access to information when shaping their investment, policy and decisions.

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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).