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Xero small business insights snapshot for December

Contributor:
Fuseworks Media
Fuseworks Media

Record high for cash flow positivity

The latest Xero Small Business Insights (XSBI) data shows an all-time high percentage of cash flow positive small businesses in November 2019.

Rising 8.51 percentage points month-on-month and 1.94 percentage points year-on-year, November 2019 data showed 58.47 percent of New Zealand small businesses were cash flow positive. This is an increase of almost 1.5 percentage points on the previous record of 57 percent in March 2019.

The average number of days payments were late in November dropped to 7.10, a decrease of 1.44 days when compared to November 2018 (8.54 days late). This brings the 12 month average to 8.29 days late, the first time this figure has been recorded below 8.3 days.

Record cash flow positive figures for small business in New Zealand

David Bell, Director of Business Growth at Xero, is thrilled to see cash flow positivity at an all-time high.

"The economy is complex, but one of the first data points I look at when assessing the health of the small business sector is the percentage of cash flow positive businesses. At 58.47 percent, we’re in good shape.

"This number grew throughout 2019 except for in June, when XSBI data showed the first negative year-on-year trend. Since that point, it’s been phenomenal to watch the percentage of cash flow positive small businesses continue to rise to the record level we’re seeing now.

"We’re also seeing the two months after each provisional tax month show some of the best results for cash flow positivity. This recent cash flow increase in November after provisional tax was due in October points to small businesses preparing and managing tax payments well.

"Looking forward, December is typically strong for cash flow positivity. If trends continue, we could potentially have three in five small businesses operating with positive cash flow. This paired with the decreased percentage of late payments is a fantastic sign for New Zealand’s small business economy as we enter the new decade."

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