Business outlook for small accounting and legal firms improved in 2011DOWNLOAD
Wednesday, 16 February 2011: The December 2010 Deloitte Black Ink® Survey reveals that the business outlook of local accounting and legal firms is slowly improving; however recovery for their clients remains patchy.
Business sentiment of small accounting firms appears to be less polarised than the last survey which was conducted six months ago. The December survey reveals the highest levels of ‘very positive outlook’ recorded since the survey was first conducted in December 2008, albeit still a relatively modest 11.1%. In addition, however, no respondents recorded a ‘very negative’ outlook (which dropped significantly from 25.6% in the last survey to zero in this survey).
This result is in line with other national forecasts which indicate that overall business confidence is expected to continue to rise slowly in 2011,” said Deloitte Partner, Simon Cathro. “Economic growth is expected to accelerate in 2011 and peak in 2012 as businesses finish cutting back expenditure and new capital projects commence.”
“Mixed signals remain regarding the strength and durability of the Australian economy over recent months. While the mining sector remains relatively strong, generally retailers, tourism and small business (including the majority of Black Ink® members’ clients) continue to struggle due to modest consumer spending, a stronger Australian currency and seven consecutive rate rises in a little over a year,” he said.
“Over half of the 90 respondents to the Deloitte Black Ink® Survey (52.6%) agree that the interest rate rises will create tighter cash flow for clients, while a further 39.2 % indicated that the greatest effect of the interest rate rises is likely to be a drop in consumer sentiment,” he said.
“We are advising our Black Ink® members that in preparation for further anticipated rate rises in 2011, local accounting and legal firms should strongly encourage their clients to seek cash flow forecasting advice.”
The survey shows that cash flow and working capital continues to be the predominant reason cited as creating financial difficulties, primarily due to outstanding old debts. However, less than half of all respondents estimate that their clients (42.3%) seek professional help when faced with insolvency.
In fact, 17.8% will continue trading.
“Given the responsibilities of directors regarding trading while insolvent, this figure is disturbingly high,” said Mr Cathro.
Please find the full media release below.