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Definitions

Xero Small Business Insights aims to provide a snapshot of the health of small businesses in Australia, to drive informed decision-making in support of the small business economy.

The metrics presented on this website have been calculated by using anonymised, aggregated data drawn from a large sample of our Australian customer base of more than 500,000 subscribers.

The methodology applied in calculating each metric is designed to capture data from a larger sample set than other business indexes and surveys and provide a comprehensive picture of business conditions. The methodology may be amended or updated from time to time to ensure it remains accurate and timely. This may cause historical data presented in the charts on this website to change, meaning it may slightly differ to historical references in some published articles and in the media.

All small businesses included in the sample data set have been active on Xero for a minimum of 12 months and meet the small business entity turnover threshold of less than $10 million as defined by the Australian Taxation Office. The samples of data selected to calculate all metrics covered a period of 36 months to enable assessment of trends over time. In all cases, there’s a 2-month period between reporting date and publish date, to allow enough time for small businesses to reconcile their accounts and finalise their numbers.

The methodology applied in calculating each metric is summarised below.

Cash flow

Xero calculated the total dollar value of cash coming in and going out of small businesses each month to determine the percentage of small businesses that were cash flow positive. The data sample included only transactions that were either fully or partially paid and resulted in money entering or leaving a bank account.

Getting paid

Xero selected a sample of accounts receivable invoices that were issued by active Australian small businesses on Xero each month to determine the average period of time it takes for a bill to be paid. The sample included only invoices with 30-day payment terms.

Hiring people

Xero selected active Australian small businesses that use Xero payroll, and calculated the percentage movement in the number of employees paid by these businesses each month. Only small businesses that had been active on Xero payroll for a minimum of 12 months were included in the sample.

Trading overseas

Xero selected a sample of small businesses that had traded in a foreign currency in a given month, and calculated the month-on-month percentage movement in the total value of foreign currency transactions that resulted in an amount coming in or going out of a bank account.

Cloud adoption

This metric shows the year-on-year movement in the total number of subscribers using Xero in Australia. This metric will be updated twice a year, when Xero’s half-yearly results are released. The expanded pie graph shows the top 5 industries adopting Xero compares the performance of the top five industries within which Xero business customers operate against the overall growth rate.