Small businesses in the nation’s capital are some of the healthiest in the country, with the ACT experiencing a major employment boom and positive drop in late payments during 2017, according to a 12-month analysis of Xero Small Business Insights.
Data analysis across the 12 months to October 2017 found the ACT experienced the highest percentage growth in small business employment of all Australian states and territories during the year, at 9.92 percent, compared to a national average of 7.8 percent. Small businesses in the ACT are also some of the fastest to be paid, at an average of 31.35 days for invoices with 30-day payment terms, compared to a 34.9 day national average.
Small businesses around the country on Xero saw improvement in 2017 across each metric, including a 7.8 percent uptick in employment, a 3.61 percentage point increase in number of cash flow positive businesses, and a 2.27 percent drop in payment times for invoices with 30-day payment terms; equivalent to a full working day for most small businesses. What stood out:
- NSW and Victorian small businesses on Xero traded overseas more in October 2017, with a 5.99 percent and 2.8 percent uptick in global transactions month-on-month, respectively
- Western Australia’s small businesses experienced the slowest growth of all states, with a 3.03 percent uptick in employment year-on-year
Queensland small businesses in metro areas have experience double-digit year-on-year employment growth, however those in regional areas have struggled to grow as quickly
- South Australian and Victorian payment times are some of the slowest in the country, averaging 37.2 days and 36.7 days across 2017 per invoice, respectively. However, these times are on a positive downward trend over the past 12 months
“While small businesses in most industries are highly seasonal in nature, on average we’re seeing major growth in small businesses across the country,” said Trent Innes, Xero Australia Managing Director.
Small businesses in the ACT have seen significant growth over the past 12 months, a testament to the conditions for businesses there, but overarchingly Australian small businesses had a strong 2017. The moves to change payment times has had a major impact on small businesses as well.
“As big businesses pledge to pay suppliers faster, we have seen a full working day cut from the amount of time it takes for late invoices to be paid. This is the start of a big and important trend and we look forward to seeing it continue into 2018,” Innes said.
Other trends from the 2017 overview of small businesses found:
- Summer slump: February is the lowest month for small businesses financially, as they recover from the busy Christmas period, with just 46.61 percent in the black and South Australian businesses worst at 45.89 percent. Businesses recovered by March 2017.
- New FY vitality: Conversely, September is the best month for healthy small businesses with 56.59 percent reaching positive cash flow. Those in NSW were strongest, with 55.60 percent of businesses in the black.
- Payment times: Average invoice payment times have continued to come down across the board, with Tasmania recording the fastest average payment times, at 29.87 days in September.