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Australian small business operators have shed a collective light on the current state of their retirement planning, with new research from MYOB revealing that over one third of SMEs are currently not contributing to their superannuation.
The latest SME Snapshot from cloud accounting provider, MYOB, found that business operators tend to prepare for retirement after 50 years of age, with over half of those aged under 50 years having done no retirement planning at all.
“Our research shows that SMEs believe they will need around $1 million to retire comfortably, yet 54 percent of respondents will not have saved enough when the time comes,” said Tim Reed, CEO of MYOB.
Of those who are self-employed, the statistics are even more alarming. Recent research by the Association of Superannuation Funds of Australia (ASFA) revealed almost one quarter of self-employed people do not have superannuation. Only 27 percent of this group in their 60s were found to have more than $100,000 in superannuation.
“It’s surprising to see that superannuation is not top of mind for all small business operators, given many contribute regularly to their employees super,” said Reed.
“MYOB research highlights a huge gap between what business operators know they should be doing, and what they are actually doing. We need to support our SMEs in retirement planning and emphasise the importance of regularly contributing to their own super.”
Late payments and cash flow a concern
The monthly survey also indicated further financial challenges for SMEs, with 54 percent waiting over six months to be paid by a customer, and more than seven in ten writing off money owed to them.
“Being a small business owner means contending with multiple challenges to the financial health of your enterprise. SMEs are often forced to wait months for payment, resulting in cash flow problems. This lack of cash can then impact the owner’s ability to pay their own super, as well as other pressing payments such as wages and rent.”
Previous research from MYOB’s Business Monitor survey revealed that cash flow concerns are consistently a top pain point for SMEs, with 53 percent of small business operators expecting the timing of payment to put pressure on their business.
“Given the difficult situation SMEs are often in when it comes to cash flow, we’d call on the government to address this issue. It would be encouraging to see the government implement a national prompt payment protocol to ensure small businesses are not being delayed payments by big businesses. Big business should lead here, by ensuring all SMEs are paid on time. Unfortunately, some look to use their power to implement unreasonable business practices, such as 90-day payment terms.
“Small businesses require government support to help limit their cash flow problems, and shorter payment terms is an important place to start,” added Reed.
In this month’s survey, small businesses were also asked about the recent drop of the Reserve Bank of Australia’s interest rate. Surprisingly, the majority of SMEs (59 percent) felt the cut would have no impact on business confidence, with only 27 percent of SMEs believing it will have a positive impact.