Confidence wavers, MYOB Business Monitor finds 2 in 3 business owners expect further economic decline in year ahead, calls for mandatory e-invoicing

Confidence among small business owners in the Australian economy has dropped by seventeen percentage points, with 66% expecting the economy to further decline in the next twelve months, according to the latest findings from the MYOB Business Monitor.

 

The twice-yearly report, which explores the attitudes of 1,000+ Australian small businesses, shows 21% expect the economy to improve in the next 12 months, compared to 28% of respondents in December 2019. 

The research also found business owners are not optimistic about the timeline for recovery, with 36% stating they expect the pandemic and its economic effects will last for six to twelve months, and another 26% predicting recovery to take another year or two, possibly longer.

CEO of MYOB Greg Ellis says Australian small business owners remain positive.

“While 39% of small businesses predict revenue will be down in 12 months’ time compared to now, Australian SMEs are incredibly resilient, and almost two-thirds (67%) of business owners are confident they can get back to normal once the pandemic has ended.”

“Our internal modelling suggests 90% of small businesses expect disruptions to last until September, 62% through until June 2021, and a further quarter expect to struggle through until the 21-22 financial year,” he said.

Now in its tenth year, the MYOB Business Monitor dissects key factors affecting small business with topics including financial stability and business pressure points.

On time payments critical to SME success

The Business Monitor data reveals late payments and cash flow rank highly as sources of pressure for small business owners, with 38% of SMEs feeling stressed by late payments from customers, and 43% citing cash flow as a primary source of concern.

Concerns about cashflow have increased 12% in the last six months, and pressure felt around late payments climbed 7%.

During an economic recession, cash flow and on time payments are critical factors that will enable a small business to survive as well as help money move quickly around Australia’s economy.

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.

According to the Business Monitor survey, 62% of sole traders and SMEs are unaware of e-invoicing and the opportunities it provides, but there is strong support for the process from businesses who are across the developments.

Of those familiar with the process, one fifth of small business owners (21%) believe it would save them between five and ten hours per month if they did not have to manually enter supplier invoice information, and 66% believe the introduction of e-invoicing should be mandatory for all governments and businesses.

Mr Ellis believes e-invoicing should be mandated, following in the footsteps of Single Touch Payroll.

“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.”

“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,” Mr Ellis said.

Pressure points and priorities

2020 has been the year many would love to forget or start again. Significantly, only 15% of business owners surveyed did not identify any immediate, pressing concerns for their business, meaning businesses are feeling the strain of the last few months.

In terms of priorities for the year ahead, while marketing investment is likely to decline in the next 12 months, small businesses are investing more in elements that will improve experiences for their current customers. Investment in customer retention strategies will increase to 24%, up from December 2019, while 1 in 5 SMEs are increasing the variety of products and services they have on offer. Of the investments most likely to stay the same, the number of full-time employees came out on top, suggesting maintaining staff is the priority.

“With the implementation of social distancing requirements and business hibernation measures, online retail and ecommerce opportunities have become even more critical to business survival. Small businesses are seeing the value in digital tools with digital literacy key to accessing and engaging customers in the months ahead.

“The sale of products and services online is the highest priority for business investment in the financial year 20-21 at 26%. Small businesses are also looking to diversify, with a further 22% increasing investments in the variety of products and services they offer,” said Mr Ellis.