Business Update
Updated: Sep 1
The latest Xero Business Insights report paints a mixed picture for Australian businesses, including RTOs.
The Economic Landscape
The Australian economy entered 2026 with solid momentum, but uncertainty has increased. The evolving Middle East conflict and renewed tensions between the US and Iran in July have created headwinds that are slowing growth and pushing up inflation.
The Reserve Bank has kept the cash rate on hold at 4.35%, citing "heightened uncertainties" about the economic outlook. Global oil supply issues are keeping energy prices elevated, which flows through to operating costs for businesses across the board.
What the Numbers Show
Sales growth is holding up, but it's uneven.
Mining (+11.8% year-on-year), utilities (+13.8%), and construction (+10.8%) are leading the pack
The ACT (+3.4%) and the larger states of NSW (+6.1%) and Victoria (+5.3%) are seeing softer results
Queensland (+8.2%) and the Northern Territory (+8.4%) are performing strongly.
Job growth is slowing
Employment rose 3.0% year-on-year in the June quarter, down from 3.3% in March
June itself saw a sharper slowdown, with jobs up only 2.0% from the previous year
Hospitality was the only sector to go backwards (-0.9%).
Wages remain modest, up just 2.4% year-on-year.
Payment Times: A Glimmer of Good News
There's some positive news on the cash flow front. Payment times improved in the June quarter, with small businesses waiting an average of 22.9 days to be paid after issuing an invoice, down from 24.2 days in March.
Late payments also eased slightly, with invoices paid an average of 6.0 days late, compared to 6.9 days the previous quarter. While some of this improvement is seasonal (the end of the financial year often brings better payment behaviour), it's still a welcome shift for businesses managing tight cash flow.
Looking Ahead
The OECD forecasts modest GDP growth for Australia of around 1.9% in 2026, following 2.0% in 2025. It's not dramatic growth, but it's steady.
For RTOs, this means planning carefully, watching expenses closely, and making sure your pricing reflects your true costs. The businesses that stay on top of their finances now will be best positioned when conditions improve.
The Bottom Line for RTOs
Small businesses, including RTOs, are feeling the squeeze. Rising input costs (particularly fuel), combined with cautious customers, are pressuring profit margins and cash flow.
If you're finding things a bit tighter than usual, you're not alone. Now's a good time to take a close look at your numbers and make sure your financial foundations are solid.
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