Published on the 14/09/2017 | Written by Jonathan Cotton

Produced by the cloud accounting software business with input from accounting firm KPMG, a new report – Xero Small Business Insights – uses the anonymous data of half a million Australian Xero app subscribers to paint a detailed picture on the SMB economic environment.

By aggregating anonymised information from a large sample of subscribers, Xero hopes the report will provide broad and up-to-date insight into the  performance of Australian small business.

“This first edition of Xero SBI is a bit like the unveiling of the Hubble telescope in 1990 which enabled scientists for the first time to see into deep space, because they were freed from the haze of the earth’s atmosphere,” said demographer and KPMG special advisor Bernard Salt. “And so it is that business is now able to glimpse the small business economy. If there is an inflection point in the Australian economy, and especially if it comes out of the small business sector, it is likely to be picked up through the aggregated cashflows, staffing levels and trading flows that are now being monitored and reported by Xero.”

Xero Australia managing director Trent Innes said the report is a snapshot of the small business economy, ‘aggregated and honest’, at the launch event in Sydney. “Such a robust resource is difficult to find. But with more than 500,000 subscribers in Australia using our software, we’ve been able to draw on a mass of reliable data to bring Xero Small Business Insights to life.”

The first report shows Australian SMBs are plagued by late payments. Just half (50.7 percent) of SMBs had positive cash flow as they near the end of the financial year. Australian small businesses waited an average of 36.2 days for invoices to be paid over the same period.

Key insights from the first report include:

• Cash flow: Just 50.7 percent of businesses had positive cash flow as of June 2017, with many operating in the red as late payments crimped working capital ahead of the financial year-end; that’s up from 48.9 percent a year earlier.
• Cloud adoption: Construction and professional services are leading the charge in adoption of Xero cloud accounting software to increase efficiency. Of the top 5 industries adopting Xero in the year through March 2017, construction made up the the largest share at 32.7 percent.
• Getting paid: As large companies pledge to bring down payment times, small businesses are slowly but surely being paid sooner; invoices with 30-day payment terms were settled in an average of 36 days in June, down from almost 40 days a year earlier.
• Hiring people: The number of employees on the small businesses payroll increased 1.3 percent month-on-month in June; that’s faster than the ABS trend figure of 0.22 percent for all Australian employees.
• Trading overseas: International trade for Xero small businesses fell slightly in June, with the total value of imports and exports sliding 2.6 percent month on month; that follows a spike of 24.3 percent in May.

View the Xero Small Business Insights Report.