According to the 2021/22 Xero State of Small Business report (which has yet to be made publicly available), 65% of small business decision-makers feel technology has become more critical to their businesses since the start of the pandemic.
Let’s take a closer look at the technologies set to continue transforming the SME community in the year ahead.
Integrated financial software
The introduction of digital bank feeds as part of open banking represents one of the biggest innovations in accounting to date, with small businesses set to reap the rewards.
Greater visibility and control over their finances and reduced data entry are just some of the benefits heading their way.
A fully digital API-enabled bank feed imports a small business’s financial data automatically from their bank account into their accounting software daily. This digital link gives business owners and their advisors an up-to-date view of the business’s financial performance, helping them make more informed decisions about future-proofing their operations.
It also helps to automate manual tasks such as tax filing, freeing up small companies to focus on growth instead.
Digital innovation to stay compliant
The cost of tax compliance remains a major challenge for SMEs and can add significantly to the cost of doing business. Businesses often do not have the necessary resources and skills to fully comply with all their tax obligations on time.
Digital tools can take the sting out of paying taxes. Some of the tax tools currently available in South Africa can calculate VAT returns (including late claims) and submit them to SARS via an accounting software dashboard.
Digital tools can take the sting out of paying taxes.
This aligns with SARS’s digital aspirations, which, according to the 2021 Tax Statistics report, continues to enhance digital platforms to empower taxpayers to comply with their tax obligations more easily.
By making it possible to manage and keep track of VAT compliance in a single workflow, compliance becomes substantially less admin-intensive for business owners and their accountants.
Having the right technology in place to automate compliance reduces a lot of inadvertent errors with less paperwork. It’s a significant stride forward to helping solve one of the biggest pain points for the country’s SMEs.
Cloud technology for improved cash flow
Research indicates the adoption of cloud technology was even higher in 2021 than in the preceding year. With many small businesses still dealing with the impacts of COVID-19, they can harness cloud computing to streamline their operations and prepare them for the future.
That’s why a sharp rise in the number of business tools that offer predictive insights is anticipated.
The dashboard-style tools – driven by artificial intelligence and machine learning technologies – are an effortless way to view critical business metrics at a glance. The technology will help business owners get a snapshot of short-term cash flow and a clear picture of future performance to make more accurate predictions.
With a cloud solution, they can quickly access business performance analysis or view a projection of the bank balance seven, 30, 60 and 90 days in the future to get better potential cash flow visibility.
Various other features can assist in providing improved forecasts and actionable insights to help a business thrive.
Connected apps to build resilience
Apps, including third-party apps, have been a lifeline for many small businesses, with those that used them before COVID-19 seeing a smaller revenue decline than those that didn’t.
We’ll see even more small businesses looking to build a connected suite of business tools to increase business efficiency in the year ahead.
This need will fuel demand, resulting in a spate of innovative start-ups. Custom integrations using open APIs between accounting platforms and app marketplaces will also proliferate to help SMEs streamline finances and monitor real-time cash flow.
The road ahead
COVID-19 will undoubtedly have a long-lasting impact on small businesses, and the road to full recovery will be long and arduous. But with a range of digital tools to assist with remote collaboration, streamline processes and even unlock new revenue streams, it is with cautious optimism that we proceed further into 2022.
Small businesses that make digitisation part of their growth strategy have a greater chance of survival.
It can help them streamline admin, trade internationally and reach new customers. Therefore, there’s no doubt that digital adoption will spearhead the way we do business in the years ahead.
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