Xero : 05/05/2021 - Xero launches pioneering index to deliver insights on the small business economy

MEDIA RELEASE

Xero launches pioneering index to deliver insights

on the small business economy

The Xero Small Business Index provides a unique, monthly snapshot of how small businesses are performing in Australia, New Zealand and the United Kingdom

Melbourne - 5 May, 2021 -Xero, the global small business platform, today launched its new Small Business Index, for Australia, New Zealand and the United Kingdom. The monthly index shows a single summary statistic of economic health based on the four metrics of sales, jobs, time to be paid and wages. Xero has also launched its first report based on data from the Index 'The Job Ahead - small businesses and the global recovery', which highlights the role the sector plays in rebuilding employment.

The new Small Business Index, part of the Xero Small Business Insights program, produced in partnership with Accenture, is based on aggregated and anonymised transactions from over 300,000 small businesses. The single composite index of the small business economy is based on a very large sample of businesses, who are reporting real accounting data to Xero about their activity. The index will show performance changes in the short and long term across the three countries currently in the program.

Steve Vamos, Xero CEO, said: "Small businesses are central to our economies, and at the heart of our communities and Xero exists to help them be more successful. Launching the Xero Small Business Index using anonymised and aggregated data from our platform helps ensure that the contribution of small business and the conditions they experience are more visible and quantified so they can be supported in the best possible way. It's not all about economics, we are talking about people; small business owners, their families, their employees and the communities they work in and are part of."

March results for the Small Business Index

The first results of the Small Business Index highlight that Australian small businesses continued to recover from the economic impact of the pandemic during March 2021.

Overall Score

The Australian Small Business Index increased 18 points to 129 in March 2021, up 16.5% compared to February 2021. The rise was driven by improvements in all four sub-metrics (jobs, sales, wages and time to be paid) during March 2021.

This is the third consecutive month the index has been above 100, indicating that overall small business performance has been better than average so far in 2021.

Sales in small businesses rose 8.1% y/y, the strongest result since the pandemic hit and only just below the result for March 2020 (+8.2% y/y).

Wages in small businesses, as measured by average employee hourly earnings, rose 2.7% y/y which was the largest year-on-year rise since the pandemic hit. However, this is still below the pre-pandemic 2019 monthly average growth rate of 3.0% y/y.

Jobs in small businesses rose 5.3% y/y, the largest year-on-year growth rate since this data started to be collected in January 2017.

The average time to be paid in small businesses improved further in March and at 22.8 days is now 2.6 days quicker than pre-crisis (February 2020).

Trent Innes, Xero Managing Director, Australia and Asia, said: "Xero's Small Business Index for March shows that the health of the small business economy in Australia continues to recover, with positive results across all four metrics. The Index tells us small businesses are hiring, consumers are spending and invoices are getting paid quicker. We will need to continue to track the recovery and support the sector where we can, as the road ahead is not linear.

"The Index is an important economic indicator showing the health of the small business economy, based on actual activity. The crucial point to make about this index is that it's not a survey; instead it's

an analysis of aggregated and anonymised data from hundreds of thousands of Australian small businesses - at a scale that is well beyond most surveys."

Report finds small business jobs key to recovery

Xero's 'The Job Ahead' report based on the Index, as well as other data sources, reveals the impact on small business employment during 2020 and the signs of recovery that can be seen in the latest figures from March 2021. The report finds that Australia needs to create 210,000 small business jobs in the next year to return to a pre-pandemic growth trajectory, and shows that young people, casuals and women were more negatively impacted by job losses in the sector. It also shows that small businesses that were more digitised and that paid higher wages had less job losses.

To read the full March results, including to download the data, go to www.xero.com/xerosbi.

To find out more about how the Small Business Index is constructed see the background information

andmethodology.

ENDS

Media Contact

Xero Australia

Jessica Brophy

[phone] [e-mail]

About Xero

Xerois a cloud-based accounting sofware platform for small businesses with 2.45 million subscribers globally. Through Xero, small business owners and their advisors have access to real-time financial data any time, anywhere and on any device. Xero ofers an ecosystem of over 800 third-party apps and 200 plus connections to banks and other financial partners. In 2020 and 2021, Xero was included in the Bloomberg Gender-Equality Index and in 2020, Xero was recognised by IDC MarketScapeas a leader in its worldwide SaaS and cloud-enabled small business finance and accounting applications vendor assessment.

About Accenture

Accenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialised skills across more than 40 industries and all business functions - underpinned by the world's largest delivery network - Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders.

Note to editors:

The Xero Small Business Index is unweighted and comprised of the following four metrics:

• Sales - captures a core measure of small business health and a measure of the overall economic activity in the small business economy.
• Time to be paid - captures how long businesses are waiting to be paid, providing insight on the financial health of their customers and small business cash flow.
• Jobs - captures if small businesses are growing and how small business is impacting on the broader economy and community.
• Wages - captures how benefits from small business performance are translating to employees-benefits flowing to the broader small business economy.

These four metrics were selected because they encompass the operating state of the small business (sales and time to be paid) and the contribution small businesses make to the community (jobs and wages).