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The Financial Year in Review (Part 3) – What Can We Expect Next Year?
The past financial year has shown that the process of transformation can be painful. As the Australian economy evolves from a resources-based one to something else entirely, the economic uncertainty that characterised the previous 12 months is likely to continue for some time.
However, transformation is ultimately a positive thing – it promises renewal, rebirth, and revitalisation. And in terms of the economy's transformation, it promises to make the Australian business landscape into an altogether different vision, one in which ecommerce payment solutions will play a central role. If business owners can adapt their outlook and operations, they will be able to stomach a little bit of short-term pain for medium-to-long-term gain.
The economy in the year ahead
After the challenges of the 2014-15 financial year, the question most likely on business owners' minds is whether the coming year will be more of the same, or an improvement. From all economic forecasts, the answer seems to be that the Australian economy will indeed pick up, but continue to underperform against long-term results.
In February 2015, the Reserve Bank of Australia (RBA) published its economic outlook for the coming years, predicting that GDP growth would remain below trend over the coming year. The RBA forecast an average growth of somewhere between 1.75 and 2.75 per cent in 2015, while tipping it to pick up to 2.6-3.5 per cent as the year crossed over into 2016. By 2016-17, it predicted GDP growth would reach some point in the band of 2.75-4.5 per cent.
The federal government's own GDP forecasts that have come with the release of the federal budget have been similar, if – as a number of commentators have pointed out – tending toward the idealistic end of the spectrum. Ernst & Young noted that the government estimated GDP to grow at 2.75 per cent in 2015, while anticipating this to climb to 3.5 per cent by 2018-19.
At the same time, as underlined by Ernst & Young, both the RBA and the Treasury expect unemployment to hit between 6.25 and 6.5 per cent in 2016-17. Meanwhile, the Australian Bureau of Statistics revealed on May 13 that wage growth has hit its lowest rate since 1998.
Even international economic conditions offer little respite. Earlier in 2015, the International Monetary Fund had to revise the forecast rate of global growth down, despite the positive economic impact of low oil prices. Sure enough, in April of this year, it predicted that growth would be uneven across the world's major economies.
Will conditions hit the kind of bottom BlackRock Australia Investment Strategist Steve Miller described to the ABC, with Australia sinking lower while the global economy forges ahead? It's difficult to say. What can be said is that Australian business owners will want to be cautious in the months ahead, and do all they can to guard their revenue. Adapting their business to the times and adopting online cash flow management tools will be a big part of this endeavour.
Cloud technology will shape business more than ever
It's important not to get hung up solely on the numbers. Just as the Australian economy is evolving, so is the face of business – and fittingly, it's this evolution that will help firms weather the storm of Australia's current transition, and enter the 21st century proper.
If the future can be summed up in one word, it's "cloud". Cloud technology has come a long way from the niche concept utilised by only a few obscure tech firms it once was. Since its early adoption by companies like Amazon, businesses have steadily made cloud a more central aspect of their operations – a trend that's only intensifying.
In November 2014, the International Data Corporation determined that cloud services spending will grow from $56.6 billion in 2014 to $127 billion in 2018, a compound yearly growth rate of 22.8 per cent.
This cloud conquest isn't simply a way for companies to feel like they are up to date with the latest business trends. It has real, tangible benefits to firms, by lowering overheads and automating otherwise time-consuming processes. Rather than making painstaking manual payments, for instance you could simply set up a credit card payment gateway to simplify the entire process. If the next year or so is as muted for business performance as it appears, a cost-saving measure like this could be crucial.
But it's not just money that's saved. Kimberly Middlemis, partner at Adrians Chartered Accountants, explained what it could mean for business owners' personal lives, too.
"If you were looking at moving to cloud … I'd probably ask you how much of your day would you get back to spend with your family," she said.
"I have little kids, so every hour that I can spend more with my kids and do less on admin on compliance is a massive bonus. How much more of your day would you like back? That is the benefit of cloud technologies."
Business owners can't control Australian or global economic conditions. However, they can take steps to ensure their companies run in an efficient, effective manner. Many businesses have already learnt first-hand the benefits that a cloud payments system can bring in subdued market conditions. The question is: How long you will put off joining them?