Earlier this month, in his Autumn Budget speech, chancellor Philip Hammond said that UK productivity performance “continues to disappoint”, with the Office for Budget Responsibility forecasting lower productivity growth than expected. As a result, GDP is now predicted to grow 1.5% in 2017; 1.4% in 2018; 1.3% in 2019 and 2020; 1.5% in 2021; and 1.6% in 2022.
To counter low productivity, the chancellor highlighted the government’s modern industrial strategy, designed to increase wages and productivity across the whole of the UK. Raising investment was key to raising productivity, said the chancellor, and fostering investment in digital industries that will “form the backbone of the global economy of the future” was critical to economic and productivity growth.
What’s causing low productivity?
In research conducted by the Federation of Small Businesses in 2016, 55% of small business owners said that their company’s growth was adversely affected by the number of hours spent on administrative tasks. The research found that small business owners spent more than 33 hours per month on business administration, with the average business losing 70 hours of employee working time to administrative duties. The highest portion of time was lost to accounting issues, with the average business spending 15 hours per month on accounting activities.
Furthermore, the research showed that 67% of small businesses were unable to focus on the primary purpose of their business as a result of administrative burdens, and 76% of owners said that they spent more time than they would like on compliance obligations, such as taxation matters, employment law and accounting tasks.
So, with administration reducing the productivity of small businesses throughout the UK, what steps can be taken to remove the admin burden?
In the Budget speech, Hammond advocated that a “dynamic and innovative” economy must be “at the heart of global Britain”, and that the country must continue to be at the forefront of the “technological revolution”.
Yet, not all businesses are currently leveraging technology to improve efficiency and fuel business growth.
A survey conducted by the UK200Group earlier this year on the readiness of businesses for the Making Tax Digital initiative found that 65% of its members’ SME business clients did not use software to manage their accounts. While 35% of businesses were using software to manage their bookkeeping, 27% were using spreadsheets, 23% were using manual records, and 16% were using the shoebox method.
So, what can accountants do to support their SME clients?
Accountants as technology leaders
Accountants can capitalise on digital advancements, positioning themselves at the helm of the technology revolution. By introducing their SME clients to innovative technology solutions, accountants can help businesses to remove current business inefficiencies and drive forward productivity and growth.
For example, using tools such as the Receipt Bank platform enables accountants to automate the collection and processing of financial transactions, with SME clients able to accurately track expenses.
With a wide range of technology choices available, from the cloud to artificial intelligence, accountants are in prime position to add value to clients by supporting them in the implementation of simpler, faster and safer processes. The introduction of accounting software saves accountants and SME clients valuable time, relieving the hours spent on administrative burdens and providing time to focus on key business strategies to increase productivity, growth and overall business success.
The OBR had previously estimated that UK productivity growth would return to levels trending before the 2008 financial crisis – approximately 2% per year. While those figures are no longer viable, accountants now have the opportunity to make a real difference to their SME clients, taking advantage of digital transformation to become technology and productivity leaders.
Discover how Receipt Bank can help you become a technology and productivity leader, and trusted advisers to your SME clients.