Accounting and legal practices have reported a slow down in SMB growth over the past three months, as the middle market faces rising international and domestic economic pressures.
According to Deloitte’s Black Ink survey, just 3.8 percent of small to medium accounting and legal practices said their clients have experienced business growth over the past three months, down from 45.1 percent in June 2010.
Deloitte Black Ink program Partner and National Leader Neil Cussen said the result demonstrates the road to financial recovery could take longer than expected for some sectors of the economy.
“SMEs are increasingly coming under pressure from a range of international and domestic economic influences – sovereign debt issues, falling consumer sentiment, increased regulatory changes at home and the spate of natural disasters have all conspired to have a detrimental impact on many businesses.”
“The uncertainty this creates has seen many members confirm that capital expenditure is off the agenda while the market remains so volatile and the lack of growth is likely to hamper capex spending in the short to medium term.”
Cussen said uncertainty created by the high Australian dollar has also impacted business, with over half of respondents reporting this had a negative impact on their clients.
“On their own, these pressures are enough to have a significant impact on many businesses, however, it seems these are being exacerbated by an increasingly aggressive approach by the Australian Tax Office in dealing with small to medium enterprises.”
Over 80 percent of respondents said they had at least one client who’d received demands, enforcement notices or some form of action from the ATO during the last quarter, whilst 46.3 percent had between two and five clients contacted.
“While the perception might be that Australia has escaped the worst of the GFC, the reality is that many SMEs are experiencing significant financial difficulty which is only being compounded by this aggressive tax approach.”
Deloitte’s Black Ink network provides specialist financial advice to member suburban legal and accounting firms in fields including tax, insolvency, superannuation, forensics, business forecasting and corporate finance.