It goes without saying that businesses need cash flow to survive. We would then assume that most businesses are cash flow positive – by this, we mean that they have more cash coming in than they pay out.
Surprising data released by cloud accounting software Xero suggests that this is not the case. Xero collect data insights across their 500,000 plus organisations in Australia and they have revealed for the month of November 2017 that only 53.9% of businesses were cash flow positive. This means that 46.1% of businesses spent more money than they banked during November 2017 – a scary statistic.
The only good news from the data is that the trend is improving. In November 2016 the percentage of businesses who were cash flow positive was only 48.7%, so it is encouraging to see that this has increased over the 12 months to 53.9%. Yet whilst the improvement is great (and a sign that the economy is improving), it is still a low figure.