1 00:00:03,990 --> 00:00:06,600 Sean Aylmer: Welcome to the Fear and Greed Daily Interview. I'm Sean 2 00:00:06,600 --> 00:00:09,539 Sean Aylmer: Aylmer. This may not come as a surprise to anyone 3 00:00:09,539 --> 00:00:12,779 Sean Aylmer: in business, but cashflow continues to be a major cause 4 00:00:12,869 --> 00:00:15,690 Sean Aylmer: of financial stress. What may shock many, though, is just 5 00:00:15,690 --> 00:00:18,989 Sean Aylmer: how big the problem is becoming, with rising costs also forcing 6 00:00:18,989 --> 00:00:22,650 Sean Aylmer: Australian small business owners to dip into their personal savings 7 00:00:22,650 --> 00:00:26,610 Sean Aylmer: or increase prices. Will Buckley is the Country Manager Australia 8 00:00:26,610 --> 00:00:30,359 Sean Aylmer: for global small business platform Xero, which is a great 9 00:00:30,360 --> 00:00:32,909 Sean Aylmer: supporter of this podcast. Will, welcome back to Fear and Greed. 10 00:00:33,630 --> 00:00:35,040 Will Buckley: Thanks very much for having me, Sean. 11 00:00:35,580 --> 00:00:39,570 Sean Aylmer: Xero has recently released a report on the impact of economic 12 00:00:39,570 --> 00:00:43,379 Sean Aylmer: conditions on the cashflow of Australian small and medium- sized 13 00:00:43,380 --> 00:00:47,189 Sean Aylmer: businesses. Just how big a challenge is that at the 14 00:00:47,190 --> 00:00:48,389 Sean Aylmer: moment, and why? 15 00:00:49,290 --> 00:00:52,379 Will Buckley: It's a huge challenge at the moment. I mean, we 16 00:00:52,379 --> 00:00:54,810 Will Buckley: look to try and keep a finger on the pulse 17 00:00:54,810 --> 00:00:58,950 Will Buckley: of how small businesses and small business owners are feeling throughout 18 00:00:59,070 --> 00:01:04,770 Will Buckley: the entire economic cycle. So, in the latest cycle, 60% of 19 00:01:04,770 --> 00:01:09,179 Will Buckley: business owners have shared that over the past 12 months 20 00:01:09,480 --> 00:01:14,459 Will Buckley: they have run into some cashflow distress, whether that's personally 21 00:01:14,459 --> 00:01:17,220 Will Buckley: or in their business. So, over a quarter of small 22 00:01:17,220 --> 00:01:20,190 Will Buckley: businesses are now dipping into their personal savings to keep 23 00:01:20,190 --> 00:01:23,069 Will Buckley: their businesses afloat, and more than a third say that 24 00:01:23,069 --> 00:01:26,309 Will Buckley: they're not even able to pay themselves. So, the cashflow 25 00:01:26,309 --> 00:01:30,059 Will Buckley: crunch for small businesses is certainly here and we really 26 00:01:30,059 --> 00:01:33,060 Will Buckley: want to shine a spotlight on how our small business 27 00:01:33,060 --> 00:01:35,580 Will Buckley: owners are feeling so that we can help the entire 28 00:01:35,580 --> 00:01:39,270 Will Buckley: small business sector get out of this cashflow crunch and 29 00:01:40,200 --> 00:01:42,209 Will Buckley: ride some waves into the next economic cycle. 30 00:01:42,539 --> 00:01:45,300 Sean Aylmer: Okay. So, those numbers you're talking about, 60%, a third 31 00:01:45,630 --> 00:01:48,029 Sean Aylmer: of them, I mean, so many of them not paying 32 00:01:48,029 --> 00:01:54,420 Sean Aylmer: themselves. How do they compare to normal times, whatever normal times are? 33 00:01:55,710 --> 00:02:00,000 Will Buckley: Yeah. Look, the small business sector is quite diverse and 34 00:02:00,000 --> 00:02:03,029 Will Buckley: broad and it covers sort of all of your industries, 35 00:02:03,030 --> 00:02:07,020 Will Buckley: not just primary, secondary and services. But you've got all 36 00:02:07,020 --> 00:02:10,889 Will Buckley: of your trades, you've got professional services, you've got hospitality, 37 00:02:10,889 --> 00:02:14,370 Will Buckley: you've got retail. So, each of those different industries is 38 00:02:14,370 --> 00:02:17,789 Will Buckley: going to go through a different economic cycle. But what 39 00:02:17,790 --> 00:02:20,219 Will Buckley: we're seeing at the moment and over the past 12 40 00:02:20,219 --> 00:02:24,750 Will Buckley: months is that this particular rate of inflation that has 41 00:02:25,080 --> 00:02:29,669 Will Buckley: escalated over the December holiday shopping period has put all 42 00:02:29,669 --> 00:02:34,559 Will Buckley: of those industries in a pretty challenging position. So, 51% 43 00:02:34,559 --> 00:02:39,359 Will Buckley: of businesses have shared that they are getting their invoices paid late. 44 00:02:39,750 --> 00:02:42,720 Will Buckley: And that is amounting to now over a billion dollars 45 00:02:42,779 --> 00:02:46,680 Will Buckley: of cashflow slowness or cashflow debt in terms of the 46 00:02:46,680 --> 00:02:48,870 Will Buckley: amount of time it's taking businesses to get paid. So, 47 00:02:48,870 --> 00:02:51,780 Will Buckley: it has been escalating as the rate of inflation has 48 00:02:51,780 --> 00:02:55,350 Will Buckley: been going up over the past 18 months. 49 00:02:55,350 --> 00:02:57,150 Sean Aylmer: That must have a great flow- in effect. If you've got half 50 00:02:57,150 --> 00:03:00,720 Sean Aylmer: the businesses not paying on time, the business receiving the 51 00:03:00,720 --> 00:03:04,828 Sean Aylmer: money then may not be able to pay its creditors 52 00:03:04,830 --> 00:03:07,980 Sean Aylmer: either. And it just sort of becomes this vicious cycle. 53 00:03:08,580 --> 00:03:11,399 Will Buckley: It makes it so challenging, because when we have the 54 00:03:11,400 --> 00:03:14,788 Will Buckley: debate and all of the advice from accountants and bookkeepers 55 00:03:14,790 --> 00:03:17,819 Will Buckley: when they work with their clients is always centered around 56 00:03:17,820 --> 00:03:21,540 Will Buckley: balancing the best possible cashflow outcome for the business owner 57 00:03:21,540 --> 00:03:24,480 Will Buckley: and the business themselves. But as you pointed out, quite 58 00:03:24,480 --> 00:03:28,048 Will Buckley: often that can mean pushing out your payables and focusing 59 00:03:28,050 --> 00:03:30,508 Will Buckley: on time to get paid on your own invoices. But 60 00:03:30,508 --> 00:03:33,508 Will Buckley: we do go in that vicious cycle. So, where we 61 00:03:33,508 --> 00:03:36,239 Will Buckley: want to shine the spotlight is on the roles that 62 00:03:36,420 --> 00:03:39,870 Will Buckley: everyone can play on helping small businesses, and making sure 63 00:03:39,870 --> 00:03:43,500 Will Buckley: that overall the economy understands the role that cashflow has 64 00:03:43,500 --> 00:03:46,530 Will Buckley: to play in keeping the engine room of these small 65 00:03:46,530 --> 00:03:50,700 Will Buckley: businesses going. So, as consumers, paying our invoices on time 66 00:03:50,700 --> 00:03:53,639 Will Buckley: to business owners, and wherever we can, just making sure 67 00:03:53,639 --> 00:03:56,940 Will Buckley: that we're communicating and keeping it really clear with business 68 00:03:56,940 --> 00:03:59,190 Will Buckley: owners so that they can make it easy to pay 69 00:03:59,190 --> 00:04:01,590 Will Buckley: their invoices as well once their invoices are getting it 70 00:04:01,590 --> 00:04:05,010 Will Buckley: paid. So, shortening the cycle on how quickly we can 71 00:04:05,010 --> 00:04:08,279 Will Buckley: get businesses paid, but also helping those businesses then on- 72 00:04:08,280 --> 00:04:11,070 Will Buckley: pay quickly as well is really important. 73 00:04:11,850 --> 00:04:13,770 Sean Aylmer: Will Buckley from Xero, I have never thought of it 74 00:04:13,770 --> 00:04:16,919 Sean Aylmer: this way, but the way you just described that it's 75 00:04:16,920 --> 00:04:19,260 Sean Aylmer: kind of like everyone has a role in this. You 76 00:04:19,260 --> 00:04:21,928 Sean Aylmer: don't have to have a small business to have a 77 00:04:21,928 --> 00:04:24,029 Sean Aylmer: role in it. We have painters at our place at 78 00:04:24,029 --> 00:04:27,659 Sean Aylmer: the moment, so if we pay the painter on time 79 00:04:27,990 --> 00:04:31,380 Sean Aylmer: and ahead of the due date, that helps the painter 80 00:04:31,380 --> 00:04:33,930 Sean Aylmer: out, and in a sense it's my 2 cents worth 81 00:04:33,930 --> 00:04:37,140 Sean Aylmer: to help the small business sector. I haven't thought of 82 00:04:37,140 --> 00:04:40,319 Sean Aylmer: it that way, but it's like a holistic national problem 83 00:04:40,320 --> 00:04:42,779 Sean Aylmer: which we all can kind of contribute to the solution. 84 00:04:43,710 --> 00:04:46,559 Will Buckley: Absolutely. It all comes down to just removing as much 85 00:04:46,559 --> 00:04:50,940 Will Buckley: friction and time out of how quickly we can circulate 86 00:04:51,180 --> 00:04:54,930 Will Buckley: currency and money through our economy. So, getting our bills 87 00:04:54,930 --> 00:04:57,719 Will Buckley: paid as quickly as possible, and it's not always easy 88 00:04:57,719 --> 00:05:00,178 Will Buckley: to pay them straight away, and that's totally understandable, because 89 00:05:00,178 --> 00:05:02,939 Will Buckley: you might be waiting for the next invoice of your 90 00:05:02,940 --> 00:05:05,488 Will Buckley: own to get paid. But yeah, it's across consumers, it's 91 00:05:05,490 --> 00:05:08,460 Will Buckley: across small businesses and it's also across big business as 92 00:05:08,460 --> 00:05:11,580 Will Buckley: well. Big businesses play a huge role in making sure 93 00:05:11,910 --> 00:05:15,329 Will Buckley: that their suppliers in their supply chain are also making 94 00:05:15,330 --> 00:05:18,450 Will Buckley: sure that their invoices are getting paid on time, if 95 00:05:18,450 --> 00:05:22,559 Will Buckley: not early. So, it is absolutely an entire supply chain 96 00:05:22,559 --> 00:05:25,409 Will Buckley: challenge that we all should face into as Australians. 97 00:05:25,979 --> 00:05:34,200 Sean Aylmer: Stay with me, Will. We'll be back in a minute. I'm 98 00:05:34,200 --> 00:05:39,450 Sean Aylmer: speaking to Will Buckley, Country Manager Australia at Xero. Okay. 99 00:05:39,450 --> 00:05:42,419 Sean Aylmer: I mean, I want to get on to more forward- 100 00:05:42,420 --> 00:05:44,190 Sean Aylmer: looking things, but I'm just interested. I think you said 101 00:05:44,190 --> 00:05:48,419 Sean Aylmer: 25% or thereabouts were people putting their savings into their 102 00:05:48,420 --> 00:05:51,299 Sean Aylmer: small business and a third weren't taking a wage. I'm 103 00:05:51,300 --> 00:05:53,039 Sean Aylmer: not sure they were the numbers, but I think they 104 00:05:53,040 --> 00:05:56,549 Sean Aylmer: were about right. That's really worrying if people aren't taking 105 00:05:56,549 --> 00:06:00,240 Sean Aylmer: a wage. Even more worrying if they're actually putting their 106 00:06:00,420 --> 00:06:01,830 Sean Aylmer: money into the business. 107 00:06:02,339 --> 00:06:06,029 Will Buckley: Yeah, it is. Almost a third are dipping into personal 108 00:06:06,029 --> 00:06:08,400 Will Buckley: savings and a third are saying that they can't pay 109 00:06:08,400 --> 00:06:11,160 Will Buckley: themselves. I mean, it is a big problem. And I 110 00:06:11,160 --> 00:06:13,558 Will Buckley: guess one of the other stats that we've seen in 111 00:06:13,559 --> 00:06:16,979 Will Buckley: the report that came through is that when individuals go 112 00:06:16,980 --> 00:06:19,770 Will Buckley: out to actually set up a business, obviously the first 113 00:06:19,770 --> 00:06:21,089 Will Buckley: thing that you want to do is you want to 114 00:06:21,089 --> 00:06:23,700 Will Buckley: test out the idea and talk to friends and family 115 00:06:23,700 --> 00:06:26,580 Will Buckley: and trusted people in your network about going out to 116 00:06:26,580 --> 00:06:28,860 Will Buckley: start a business. And one of the stats that came 117 00:06:28,860 --> 00:06:32,759 Will Buckley: through was almost 70% of business owners that are in 118 00:06:32,759 --> 00:06:36,510 Will Buckley: business today have actually had those conversations with friends and 119 00:06:36,510 --> 00:06:40,169 Will Buckley: family and been met with a negative response. So, there 120 00:06:40,170 --> 00:06:43,800 Will Buckley: seems to be, even in the early days of where 121 00:06:43,980 --> 00:06:46,558 Will Buckley: people are exploring the idea of going into business, a 122 00:06:46,559 --> 00:06:49,620 Will Buckley: little bit of a negative sentiment and a conservative sentiment 123 00:06:49,620 --> 00:06:51,660 Will Buckley: around whether or not that's the right thing to do. 124 00:06:51,990 --> 00:06:55,050 Will Buckley: But on the flip side, everyone that has started a 125 00:06:55,050 --> 00:06:57,928 Will Buckley: business, 60% of those people that we surveyed said that 126 00:06:57,930 --> 00:07:01,020 Will Buckley: they wish that they'd started sooner. So, there's perhaps some 127 00:07:01,020 --> 00:07:03,480 Will Buckley: myth busting that we can do to really make sure 128 00:07:03,480 --> 00:07:05,610 Will Buckley: that we're supporting business owners, if they have a great 129 00:07:05,610 --> 00:07:08,279 Will Buckley: idea and they want to go deep into serving their 130 00:07:08,279 --> 00:07:11,639 Will Buckley: local communities, to get out and do it and work 131 00:07:11,639 --> 00:07:14,550 Will Buckley: with people that have done it before and that are 132 00:07:14,550 --> 00:07:18,390 Will Buckley: there to support them, like accountants and bookkeepers. So, then 133 00:07:18,390 --> 00:07:20,340 Will Buckley: we don't get into the trap of some of these 134 00:07:20,340 --> 00:07:23,730 Will Buckley: flow down effects of not necessarily being able to pay 135 00:07:23,730 --> 00:07:27,209 Will Buckley: themselves and dipping into personal savings. So yeah, really tapping 136 00:07:27,210 --> 00:07:30,359 Will Buckley: into the expertise and experience of people that have been 137 00:07:30,359 --> 00:07:33,150 Will Buckley: there and been on that journey before that can share 138 00:07:33,150 --> 00:07:36,239 Will Buckley: some of the lessons that they learned. Because, I mean, 139 00:07:36,240 --> 00:07:40,350 Will Buckley: what we've seen is it's a continuous learning opportunity for 140 00:07:40,800 --> 00:07:43,320 Will Buckley: business owners that they go on when they start their business. No 141 00:07:43,320 --> 00:07:45,929 Will Buckley: one gets it right the first time. So, being able 142 00:07:45,929 --> 00:07:49,710 Will Buckley: to lean on trusted confidants in your network and people 143 00:07:49,710 --> 00:07:51,900 Will Buckley: that have done it before is super valuable. 144 00:07:52,320 --> 00:07:57,150 Sean Aylmer: And presumably that feeds into forecasting cashflow reasonably accurately. 145 00:07:58,110 --> 00:08:02,490 Will Buckley: It does. And what we've seen is there's no silver 146 00:08:02,490 --> 00:08:06,479 Will Buckley: bullet to solving cashflow and monitoring it in real time 147 00:08:06,480 --> 00:08:09,300 Will Buckley: and maintaining a nice healthy balance. But it's probably the 148 00:08:09,300 --> 00:08:11,730 Will Buckley: sum of a couple of parts and a couple of 149 00:08:11,730 --> 00:08:14,610 Will Buckley: tactics that we see that start to add up and 150 00:08:14,610 --> 00:08:18,269 Will Buckley: become quite significant when they all combine. And it is 151 00:08:18,270 --> 00:08:23,219 Will Buckley: around setting up a really good invoicing workflow to make 152 00:08:23,219 --> 00:08:25,560 Will Buckley: sure that you're getting paid as quickly as possible by 153 00:08:25,830 --> 00:08:29,040 Will Buckley: using technology to connect to payment gateway for whether it's 154 00:08:29,040 --> 00:08:33,120 Will Buckley: direct debits or online invoice payments. Making sure that you 155 00:08:33,120 --> 00:08:35,370 Will Buckley: do have a realtime view of your cash flow so 156 00:08:35,370 --> 00:08:37,679 Will Buckley: you can manage what payments are coming in and what 157 00:08:37,679 --> 00:08:40,469 Will Buckley: payments should be going out. And then once you get 158 00:08:40,469 --> 00:08:43,559 Will Buckley: that realtime view of your cash flow at your fingertips, 159 00:08:43,740 --> 00:08:46,679 Will Buckley: you then have more confidence to understand how much you 160 00:08:46,679 --> 00:08:49,470 Will Buckley: should be paying yourself, or what's the right level of 161 00:08:49,470 --> 00:08:52,830 Will Buckley: investment to start to look to build your business and 162 00:08:52,830 --> 00:08:55,980 Will Buckley: invest in maybe some equipment or some new products or 163 00:08:55,980 --> 00:08:59,399 Will Buckley: whatever might be relevant for that business. So, that realtime 164 00:08:59,400 --> 00:09:02,400 Will Buckley: view of your cashflow is just a really critical piece. 165 00:09:02,400 --> 00:09:06,090 Will Buckley: And technology's come a really long way recently to help 166 00:09:06,090 --> 00:09:10,679 Will Buckley: business owners take that first step with confidence of understanding 167 00:09:10,679 --> 00:09:12,959 Will Buckley: their cashflow position from the very beginning. 168 00:09:13,500 --> 00:09:16,499 Sean Aylmer: And I appreciate this is (inaudible) , because you are from Xero, Will. But 169 00:09:17,219 --> 00:09:19,530 Sean Aylmer: just the idea of using technology to be able to 170 00:09:19,530 --> 00:09:23,250 Sean Aylmer: do that, it must alleviate a lot of the stress 171 00:09:23,309 --> 00:09:26,309 Sean Aylmer: from running businesses. And as we're talking here, I know 172 00:09:26,309 --> 00:09:29,069 Sean Aylmer: that you guys have done some work also on the 173 00:09:29,070 --> 00:09:32,460 Sean Aylmer: significant personal impact this sort of thing has on business 174 00:09:32,460 --> 00:09:35,339 Sean Aylmer: owners. But it must be nice for business owners at 175 00:09:35,340 --> 00:09:37,650 Sean Aylmer: times to actually have to worry about that a bit less. 176 00:09:38,429 --> 00:09:42,690 Will Buckley: Oh, of course. I mean, 45% of small businesses admit 177 00:09:42,690 --> 00:09:47,250 Will Buckley: that they are worried about their personal financial future, and 48% 178 00:09:47,250 --> 00:09:50,549 Will Buckley: are concerned about the business's financial future as well. So 179 00:09:50,549 --> 00:09:54,119 Will Buckley: those are two financial health metrics that we track. But 180 00:09:54,119 --> 00:09:58,200 Will Buckley: just overall, it's not just about financial wellness, there are 181 00:09:58,200 --> 00:10:02,130 Will Buckley: other categories of wellness such as mental wellbeing and making 182 00:10:02,130 --> 00:10:05,369 Will Buckley: sure that business owners are able to feel comfortable and in 183 00:10:05,370 --> 00:10:08,369 Will Buckley: control of the decisions that they want to make. And 184 00:10:08,370 --> 00:10:11,819 Will Buckley: they can feel connected, as connected and as close as 185 00:10:11,820 --> 00:10:15,330 Will Buckley: possible to reaching the goals that they originally set themselves 186 00:10:15,570 --> 00:10:18,120 Will Buckley: when they went out to build their business. So, it's 187 00:10:18,120 --> 00:10:21,540 Will Buckley: really important that we connect that financial wellbeing with personal 188 00:10:21,690 --> 00:10:24,360 Will Buckley: and wellness as well, and don't just look at the 189 00:10:24,360 --> 00:10:28,859 Will Buckley: financial side in complete isolation from how business owners are looking 190 00:10:28,859 --> 00:10:32,970 Will Buckley: and feeling themselves internally about their business. So yeah, lots 191 00:10:32,970 --> 00:10:36,300 Will Buckley: of positivity and reinforcing. Anything we can do to help 192 00:10:36,300 --> 00:10:40,439 Will Buckley: business owners feel in control and have that realtime view 193 00:10:40,440 --> 00:10:42,900 Will Buckley: of their cash flow comes through in the report as 194 00:10:42,900 --> 00:10:45,870 Will Buckley: being really helpful for business owners feeling comfortable that they 195 00:10:45,870 --> 00:10:48,149 Will Buckley: can navigate the current economic environment. 196 00:10:48,690 --> 00:10:50,550 Sean Aylmer: Will, thank you for talking to Fear and Greed. 197 00:10:51,179 --> 00:10:52,108 Will Buckley: Thank you very much, Sean. 198 00:10:52,950 --> 00:10:55,800 Sean Aylmer: That was Will Buckley, Country Manager at Xero, which is 199 00:10:55,800 --> 00:10:58,349 Sean Aylmer: a supporter of this podcast. This is the Fear and 200 00:10:58,349 --> 00:11:00,718 Sean Aylmer: Greed Daily Interview. Join us every morning for the full 201 00:11:00,719 --> 00:11:03,930 Sean Aylmer: episode of Fear and Greed, Australia's most popular business podcast. 202 00:11:04,170 --> 00:11:05,968 Sean Aylmer: I'm Sean Aylmer. Enjoy your day.