Digital technologies present opportunities for SMEs

Digital technologies present opportunities for SMEs

Accountants well placed to help educate SMEs of the benefits of digitisation.

Digital technologies present opportunities for SMEs

Chartered accountancy firm Wylie & Bisset is urging SMEs to review their procedures and processes so they are better positioned to take advantage of the efficiencies digital technologies offer.

This encouragement comes ahead of the January launch of the ScotlandIS’s strategy, which aims to turn Scotland into a digital nation.

Many of these efficiency gains can be found by reviewing their current procedures and practices. This could be as simple as identifying antiquated software or programs and the automation/simplification of more manual processes.

According to a report conducted by PWC, SMEs lag behind larger enterprises when adopting and utilising digital tools. For example, only 44% of SMEs made an online purchase in 2017 compared to 63% of large enterprises. The major barriers that are preventing SMEs from adopting digital technologies include financial constraints and a lack of awareness about the potential gains.

The importance of SMEs adopting digital technologies is underscored by the fact they employ the majority of the workforce. Within the EU, SMEs account for 67% of total employment.

Andrew Cowling, partner at Wylie & Bisset said: “Many digital technologies and apps are significantly slicker and easier to use than the old-fashioned manual ways of doing things, whether paper or spreadsheet.”

“The adoption of digital technologies for various business admin functions enables processes and procedures to be undertaken far quicker and far more efficiently than previously and the knock-on effect is huge efficiencies for businesses and a lot less wasted time,” he added.

Advising SMEs

When asked what steps SMEs should take to help in adopting digital technologies, Cowling said:

  1. Awareness— get an awareness as to what is out there and what can be done. The pace of change, particularly in the accounting and bookkeeping sector, has increased a lot in the last few years. Speak to other businesses in the same sector, any other contacts, your accountant or other advisors, your IT team etc. Look at your software/app providers etc. Attend sector conferences as this is a good way to hear what is happening and what is on the horizon. Take advice and recommendations.
  2. Review— review your own system and processes. See how well different parts integrate. Review the apps/software carefully considering pros and cons and what is likely to work best for your business. Many of the apps are subscription based and offer free trials as well as free webinars, videos etc. Consider if there could be improvements in data flow and integration. Think about what your ideal output would be.
  3. Plan and implementation— form a plan for the switch over and implementation. Training for the team on the new software and new processes.

Benefits of a timely adoption

There are numerous benefits when adopting digital technology that improve the efficiency of a business by automating and digitalising simple but essential processes. Within accounting and bookkeeping, Cowling said:

  1. Data capture/entry— There are apps and features which can simplify and automate the data entry to the software. You can scan or take a photo of an invoice or receipt and send it to an app which reads it and inserts the data to the software. There is also the bank feed whereby the software can link to the business bank account(s) including credit cards and automatically import the data to the software. This saves time involved in getting the bank statement and typing the information in manually. It also reduces the likelihood of errors.
  2. Automation features— lots of built in automation features including creating rules for certain transactions e.g. take regular payments such as rent and post them to the rent expense account. The software learns the names and tries to match e.g. supplier invoices to payments made to the supplier and same with customers. You can set reminders to chase outstanding debtors etc.
  3. Open API— The open API or Application Programming Interface is the method by which the software packages share data or communicate with each other. This means the data can be shared between apps. In practice it means that the till system in a shop can feed all its data into the accounting system or the EPOS system can feed in or the credit card machine etc. Or the accounting system can feed its data into a cashflow forecasting system to constantly update and reforecast. Xero has hundreds of apps which can be used alongside it. This means SME’s can integrate a lot more of their functions, share and make better use of the data. Easily see, review, monitor and extract that data. Since there are live links the data is always updated and up to date

Beyond time saving

Furthermore, these benefits are not restricted to improving the efficiency of a business. Digital technologies give businesses better access to their data, allowing them to make more timely and informed decisions. This in turn helps them be more responsive to changing market conditions.

Cowling gave some examples on what digital technologies can do to that improve the accessibility and security of a firm’s accounts:

  1. Single source of truth— with accounting software there is the one set of data sometimes known as a ‘single source of truth’. There aren’t multiple backups i.e. one live used by client an older version used by the accountant.
  2. Better back up and disaster recovery— With cloud systems you are relying on the provider to ensure the data is constantly backed up and stored in multiple locations. Most SME’s back up and disaster recovery plans aren’t likely to be as good as those run by these specialist organisations. The data is constantly backed up so it is unlikely any data would ever be lost. If there is a disaster or failure in the SME’s computer systems, you can simply access the data from an alternative location or computer.
  3. Can access anywhere and on any device— You can access the cloud data from any web browser with an internet connection. Many have dedicated smart phone/tablet apps for ease of any device. This can be useful to check information on the go. For example, you are heading to meet a customer and you can check whether their bills have been paid or how much they spent with you last year etc.
  4. New features, updates, security are all rolled out automatically and regularly— with cloud systems the software company issues the new updates including security features constantly. You may not even notice when they happen. There is no need for new discs or to download and install updates or to upgrade each year. The security is likely to be much better than that operated by most SMEs.

Overall, there are a plethora of advantages to adopting digital technologies. While the process of adopting these new systems is not easy, SMEs can take steps to mitigate teething problems and accountants can better advise their clients on where these benefits are and why make the adoption.

As part of its digital accounting offerings, Wylie & Bisset has entered into partnership agreements with Tide and Revolut, two digital business banks.

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