Home Strategy A $7 billion hit on SMEs, economy from banking ‘red tape’ says Tyro

Banking inefficiencies and red tape are costing Australia’s small and medium-sized businesses and the economy billions of dollars every year, according to newly published research from Eftpos payments provider, Tyro.

Tyro chief executive Jost Stollmann says the research reveals that banking red tape is “robbing” more than 880,000 of Australia’s two million small and medium-sized businesses of four weeks’ productive work time a year, at a cost to the national economy of almost $7 billion annually.

“This equates to an extra 20 working days a year – or the entire annual holidays of the average employee,” Stollmann says.

According to Stollmann, 44% of Australian SMEs — or 880,000 businesses spend more than three hours every week checking, entering, paying and reconciling data, costing each business an average of $7800 a year.

The Tyro research also found that:

•    700,000 businesses, or 35% of SMEs, believe their bank could be doing a better job;

•    One million, or 50%, of SME owner/operators are doing their own bookkeeping; and

•     400,000, or 20%, of SME owner/operators don’t use any form of accounting software.

“Large companies, with more than 200 employees, make up only 0.3% of businesses operating in Australia,” Stollmann says.

“By comparison, small and medium-sized businesses are the creative and innovative heart of the Australian economy, generating more jobs than any other sector.

“But SMEs are drowning under the burden of inefficient online business banking processes that are robbing them of three hours a week, or 20 days a year.

“This means SMEs have to work a 13-month year, or give up the equivalent of four weeks’ annual holiday to compensate for banking inefficiencies.”

According to Stollmann, the research findings explain why a “staggering 700,000 SMEs are unhappy with their business bank’s performance”.

“Banks need to try harder to reduce the burden on Australian businesses. It is clear that business banking requires a rethink. It needs to be mobile, embedded into business and accounting software and fully automated. The winners in the business banking of the future will marry deep technology and banking know-how.”

And, despite SMEs playing a critical role in the Australian economy, Stollman says their contribution to GDP has slowed since 2012 and, he suggests, the priority is to establish what the major “pain points were for the industry and help SMEs drive future growth”.

“Australia should be looking at action to improve SME productivity, in recognition of the changing terms of trade and resources decline. We should help SMEs operate more efficiently,” he says.


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Peter Dinham

Peter Dinham is a co-founder of iTWire and a 35-year veteran journalist and corporate communications consultant. He has worked as a journalist in all forms of media – newspapers/magazines, radio, television, press agency and now, online – including with the Canberra Times, The Examiner (Tasmania), the ABC and AAP-Reuters. As a freelance journalist he also had articles published in Australian and overseas magazines. He worked in the corporate communications/public relations sector, in-house with an airline, and as a senior executive in Australia of the world’s largest communications consultancy, Burson-Marsteller. He also ran his own communications consultancy and was a co-founder in Australia of the global photographic agency, the Image Bank (now Getty Images).


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