Almost half of Kiwi small business owners unable to pay themselves
Tight cash flow, high inflation, rising interest rates and reduced customer sentiment are costing small businesses and sole traders, says Xero.
Cash flow blockages and worsening economic conditions have left almost half of New Zealand small business owners unable to pay themselves.
Xero New Zealand country manager Bridget Snelling says the report reveals the significant financial stress small business owners and sole traders are facing.
“Cash flow is one of the biggest challenges small businesses are facing. When you add in inflation, climbing interest rates and reduced spend from consumers, small business owners are walking a tightrope every day,” said Ms Snelling.
“It’s a systemic and volatile cycle, which sees business owners dipping into their own personal savings, working unattainable hours, and ultimately sacrificing their emotional and physical wellbeing to stay afloat.”
The results are a close reflection of their Australian counterparts, which found 27 per cent of businesses used personal savings to stay afloat with one-third (34 per cent) unable to pay themselves.
Xero said late paid invoices were one of the largest contributors to the cash flow struggles of small businesses with delayed invoice payments costing Kiwi small businesses $456 million annually.
“Getting paid on time is crucial for small business operations. Unlike large businesses, SMEs don’t typically have the working capital available to manage the sometimes ridiculous time between doing the mahi and getting paid for it,” said Ms Snelling.
“Ultimately, we need bigger businesses to pay their invoices on time.”
“Xero challenges all businesses to commit to paying invoices within 10 working days to help strengthen the New Zealand economy while supporting suppliers and customers in the small business community.”
Small business owners said they had felt the emotional and physical impacts as a result of the tight cash flow and conditions over the past 12 months, with 80 per cent reported feeling stress, 70 per cent anxiety, 60 per cent experienced sleep issues, and 47 per cent lost time with friends and family.
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