Sole traders are spending extra time and money preparing for the financial year-end, costing the New Zealand economy an estimated $300 million. This cost represents 10% of the $3.2 billion total productivity lost by sole traders each year.
New Zealand,Tuesday 12 April 2022 – The latest Hnry Sole Trader Pulse report reveals some sole traders are spending 12 hours per week on extra admin at the end of the financial year - costing the NZ economy an estimated $300 million in lost productivity.
Hnry is New Zealand’s largest specialist accountancy and commissions a regular index of independent earners - the Hnry Sole Trader Pulse - conducted independently by Resolve Strategic. There are over 540,000 sole traders in New Zealand, making up 19.7 percent of New Zealand’s working population, including freelancers, contractors, consultants, gig workers and the self-employed.
The most recent Sole Trader Pulse report shows that preparing for the financial year-end is an ongoing pressure for those sole traders who rely on the combination of small enterprise accounting software and traditional accounting services.
The $300m in lost productivity for those New Zealand sole traders using these methods at financial year-end represents 10% of the total $3.2 billion in productivity lost by that same group throughout the year - with the Sole Trader Pulse indicating these individuals spend at least five hours every week manually reconciling, processing, and navigating software. Tradies lose the most time to financial admin - an average of two days, or 14-hours every week.
James Fuller, Co-founder and CEO of Hnry says using small enterprise software alongside traditional accountants can mean that some sole traders spend an unnecessary amount of time managing financial admin:
“Some sole traders have a really tough time when it comes to the end of the financial year. Often they are treated as though they have the same sorts of complexities as small companies - meaning they are encouraged to use software and services that are better suited to those who have significant amounts of complexity, leading to them spending a lot of time on activities that aren’t relevant for them. Being ‘busy with admin’ isn’t a positive thing for sole traders, who would much rather be working with clients or spending time with friends and family.”
The Sole Trader Pulse report also found that paying for software packages as well as a traditional accountant can cost these sole traders an average of over $11,000 per year. Even those using cut-down versions of small enterprise accounting software reported incurring additional costs, with 61 percent of those using basic versions of software having to pay separately for a traditional accountant to support them.
“The cumulative impact to the NZ economy of sole traders’ lost productivity can’t be understated”, says James Fuller. “The latest Sole Trader Pulse shows that some sole traders are still incurring a significant cost, and spending a significant amount of time managing admin - at a time when they should be free to focus on things they enjoy doing. The overall loss of productivity, coupled with the mental health impacts of the financial admin are often cited by sole traders as being their biggest challenges.”
Founded in 2017, Hnry is one of New Zealand’s largest accountancies that provides a pay-as-you-go all-in-one digital accounting service handling invoicing, expenses, payments, taxes, filings as well as providing expert on-demand support. Hnry takes care of all the financial admin for contractors, freelancers, sole traders and the self-employed - allowing them to focus on getting the job done, rather than worrying about tax and compliance.
Hnry is currently a finalist for the ‘Hi-Tech Service of the Year’ at the 2022 New Zealand Hi-Tech Awards, won ‘Supporting Gold’ at the 2020 Wellington Gold Awards, won ‘Emerging Service of the Year’ at the 2019 Wellington Gold Awards, and was a finalist for the ‘Hi-Tech Service of the Year’ at the 2019 New Zealand Hi-Tech Awards.