Faster payment times & strong jobs growth caps off financial year

• Business News

The Australian Index rose a record high 156 points in June, a result of faster payment times for small businesses and a healthy jobs growth to finish the 2021-22 financial year.

According to Xero, the Australian Small Business Index rose 29 points – the highest result ever recorded.

The increase is largely due to a decline in the average time small businesses waited to be paid, which according to Xero, fell 3.5 days – to an average of 20.1 days.

There was also a 2.2 day decline in late payments to 4.7 days – which is a record low across the last five years’ worth of data.

End of financial year has been flagged as the reason behind these statistics and are expected to level across the coming months.

“The time it takes for small businesses to get paid can massively impact cash flow, so it’s encouraging to see a drop in payment times,” said Joseph Lyons, Managing Director of Australia and Asia, Xero.

“Although this is a seasonal impact, there is still reason to be cautiously optimistic – after all, healthier cash flow equals stronger small business performance. Despite inflation impacting Australian household spending, sales growth has continued at a double-digit pace.”

source: Xero Small Business Index

June tops jobs growth for 2022

June recorded the strongest jobs result for 2022, increasing 2.0 percent y/y, following a 0.2 percent y/y rise in May.

Industries that led the rise included administrative services, which saw a 6.9%  growth y/y and professional services which saw a 4.4% growth compared to the previous year.

These growth sectors echoed previous months where industries that facilitate working from home have been better able to grow jobs.

Continuing recent trends, education and training (-1.9% y/y), wholesale trade (-0.5% y/y) and agriculture (-0.2% y/y) were the three industries still recording declining jobs.

“The jobs result is hugely positive, and fantastic to see a rebuilding in recent months after a soft start to 2022,” said Louise Southall, Economist, Xero.

source: Xero Small Business Index

Cash flow management

Managing cash flow is important, so having an experienced accountant guide this process is essential. Even if you are financially savvy, an accountant ensures that your business finances are in order, helping to create positive cash flow in your business throughout the year.

Read more about managing cash flow HERE

Interested in learning more? Book your obligation free chat with the experienced team at Elevate Accounting HERE or call us today (08) 9460 1040.