Accounting platform Dext has released research showing how businesses are investing in staff, software and accounting expertise to counter the economic turbulence brought on by Covid.
In the UK, average spending on general businesses expenses in May 2021 climbed 34.6% year on year, with strong recovery trends continuing towards the new year as companies invest in growth.
Dext analysed 100 million business transactions throughout the pandemic, unveiling the changes in business investments brought on by the crisis. While businesses cut spending on sales (-9%), philanthropy (-55%) and travel (-100%), health (+68%) and staff expenses (+18%) became priorities for survival and recovery in 2021. Investment in remote working continues to be a priority for businesses, with spending on Zoom increasing as much as 390% in some countries.
Business spending on overheads fell sharply at the announcement of the first lockdown at the end of March 2020, yet businesses also invested considerably in accountancy, finance, and insurance: +16%, staff expenses: +41% and software & technology: 23%.
Business also spent more on hiring contractors, with aggregated costs in the UK climbing 16% in the first month of lockdown and global contractor costs spiking in the spring of 2020, rising 106% between April and May. Contractor expenses remain 18% higher than they did in October 2019.
Dext Director Paul Afshar said: “We are encouraged by the return to pre-pandemic levels of spending and business investment in talent and software. The economic recovery has coincided with a new demand for skilled workers, and businesses are investing heavily to give staff the technology and support they need to thrive.”
While most sectors looked to cut back on expenses through the first lockdowns, data provided by Dext shows that staff, software and skills expenditures were reinforced through the pandemic. Key findings from Dext include:
- UK spending on software and technology peaked at a 66% increase in July 2020 as leaders adapted to remote work. In Q1 of 2021, the average e-spend per transaction grew by 14% in the UK.
- In France, leaders are investing in in-house staff and contractors with average spend on software and technology increased by 497%. A growing remote working culture saw Microsoft expand its overall spend by a factor of 17 since 2018.
- In Canada year on year spending on staff expenses overall increased by 53% from 2019 to 2020. Recorded staff expenses rose from $5,000 in January 2020 to $20,000 in April 2020, and now sits at $10,000. As businesses cut back on rent (-49%), they invested into staff to provide the tools needed to operate remotely.
- US companies are expanding their investment in technology. The country reached pre-pandemic levels of spendings in April 2021, investing most in accounting, finance and insurance, advertising and marketing.
Gathered from Dext’s customer base of over one million users, these spending trends show how businesses around the world have responded to the pandemic. Dext works with firms in the UK, Australia, Canada and the US to help simplify accounts and provide better data and insights. here.