Evolve Online Bookkeeping's Natalie Grohn emphasizes that, in the current uncertain Australian economy, a clearly defined set of business analytics can provide crucial support for small businesses during challenging times.

In her discussion with Gavin Nash on the FS360 Podcast, Grohn articulated the range of services Evolve offers to help small businesses navigate these difficulties.

Current forecasts indicate an increase in the small business failure rate from 4.4% to 6% this year, with continued operational challenges anticipated in the near future.

The Australian Securities & Investments Commission reports that small businesses account for a significant portion of annual insolvency statistics, with the risk of failure surging by 20% compared to the previous year. This spike is attributed to high interest rates, escalating costs, and a decline in consumer spending.

"Businesses are facing elevated costs, and consumers are increasingly cautious about discretionary spending," Grohn noted.

"Survival beyond the first five years is a significant challenge for small businesses in Australia. Additionally, sourcing the necessary skills to sustain operations in the current labor market remains a concern."

Evolve provides various services, including monthly bookkeeping, bank reconciliations, business reporting, preparation for activity statements, payroll, superannuation processing, as well as Xero setup and conversion.

They also focus on cash flow management, a critical component for small businesses during this period.

"There are various software integrations that can transform cash flow concerns into confidence. Effectively utilizing Xero can help maintain oversight of cash flow," Grohn stated.

Recommended strategies for managing slow payments include monitoring invoices, tracking payment histories, conducting credit checks, identifying potential customer issues, and employing tracking software.

"Xero offers excellent features that enable automatic reminders for customers regarding their invoices," Grohn added.

While these services provide immediate benefits, such as ensuring timely payments, they also promote strategic long-term decision-making.

Xero facilitates the monitoring of profitability, emphasizing the importance of gross and net profit for small businesses. This platform enables users to compare current performance with historical data, customize profit and loss reports, and keep track of assets and liabilities.

“Two primary areas of reporting involve analyzing aged receivables—essentially your debtors—and aged payables, which refer to your creditors,” Grohn stated.

“Regularly monitoring these figures can help identify trends, such as a slowdown in customer payments or the status of aging balances. This vigilance is crucial for effective planning of upcoming financial obligations.”

Moreover, Xero allows the establishment of tracking categories, enhancing the capability to monitor various aspects of the business and identify areas that may require future investment.

“You can assess the performance of different locations in terms of sales. It is essential, however, to ensure that tracking categories are included in all transactions, whether through accounts payable invoices or journal entries,” Grohn advised.

“This data can then be utilized for comprehensive reporting, including profit and loss statements, segmented by categories.”