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The outlook among small businesses has taken a hit, with many expecting the economy to further decline in the next 12 months as on-time payments become critical for survival.
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Two-thirds of SMEs expect further economic decline; on-time payments to be ‘critical’
17 July 2020
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The MYOB Business Monitor report has revealed that confidence among small-business owners in the Australian economy has slumped by 17 percentage points, with 66 per cent expecting the economy to further decline in the next 12 months.
The twice-yearly report, which explores the attitudes of over 1,000 Australian small businesses, shows just one in five expects the economy to improve in the next 12 months.
The latest finding also reported business owners are not optimistic about the timeline for recovery, with 36 per cent stating they expect the pandemic and its economic effects will last for six to 12 months, and another 26 per cent predicting recovery to take another year or two, possibly longer.
MYOB chief executive Greg Ellis said Australian small-business owners remain positive.
“While 39 per cent of small businesses predict revenue will be down in 12 months’ time compared to now, Australian SMEs are incredibly resilient, and almost two-thirds of business owners are confident they can get back to normal once the pandemic has ended,” Mr Ellis said.
“Our internal modelling suggests 90 per cent of small businesses expect disruptions to last until September, 62 per cent through until June 2021, and a further quarter expect to struggle through until the 21–22 financial year.”
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On-time payments are now also critical to SME success, according to the report.
It revealed that late payments and cash flow rank highly as sources of pressure for small-business owners, with 38 per cent of SMEs feeling stressed by late payments from customers and 43 per cent citing cash flow as a primary source of concern.
Concerns about cash flow have also increased by 12 per cent in the last six months, and pressure felt around late payments climbed by 7 per cent.
Mr Ellis believes e-invoicing will help speed up payment times, and has called for it to be mandated, following in the footsteps of Single Touch Payroll.
E-invoicing is beginning to take shape in the country, after the government announced that agencies capable of receiving e-invoices will start paying e-invoices up to $1 million in value within five days or pay interest on any late payments.
Research from Deloitte Access Economics has found that e-invoicing could result in economy-wide benefits of up to $28 billion over 10 years.
However, according to the Business Monitor survey, 62 per cent of sole traders and SMEs are unaware of e-invoicing and the opportunities it provides, yet there is strong support for the process from businesses who are across the developments.
In 2019, the federal government introduced e-invoicing to help businesses save time and money by allowing the direct, electronic exchange of invoices between suppliers’ and buyers’ financial systems.
Of those familiar with the process, one-fifth of small-business owners believe it would save them between five and 10 hours per month if they did not have to manually enter supplier invoice information, and 66 per cent believe the introduction of e-invoicing should be mandatory for all governments and businesses.
“E-invoicing will help businesses get paid faster, which is going to be key in the recovery of small businesses coming out of this pandemic,” Mr Ellis said.
“We commend the federal government’s commitment to electronic invoicing and believe it should be a priority for all businesses. In terms of a transformative impact on small-business operations, e-invoicing will be as important as Single Touch Payroll was.”
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