Technology is critical to helping small businesses sell and operate online by optimising processes, driving efficiencies and offering improved customer services.
The Xero Time to Build Report shows that adoption of digital tools like cloud accounting has surged in South Africa, from 13% of SMEs using it in 2017, to 61% in 2020. Technology like cloud tools and automation are helping to level the playing field for small businesses; however, many still face barriers to adoption.
Government needs to reduce the red tape caused by outdated and time-consuming communication and data processing methods, by moving the small business community to an environment driven by data, insights and opportunity.
We also need to break down the barriers that prevent SMEs from investing in technology by introducing new incentives like tax breaks and subsidies so employers can boost tech skills in their businesses.
Technology also has the power to connect the most important stakeholders in our small business economy. It can help join the dots between SMEs, their accountants, banks, government, tech companies and funders.
We need to see more collaboration and sharing of data among these key stakeholders to support businesses with the insights and the tools they need to grow.
Accelerating automation
Our research shows more than two-thirds (67%) of SMEs struggle to find the right talent to execute their digital strategies. This means they aren’t getting the full benefits tech − especially automation tools − can offer.
We need technology skills development to grow at the same pace as emerging technologies to see the full benefit to our economy.
Technology has the power to connect the most important stakeholders in our small business economy.
This means investment from small businesses in upskilling their teams, but also support from government to ensure the future business owners studying now are learning these skills. This will help us future-proof our economy.
Nearly half (47%) of South African SMEs cite cash flow issues and late payments as two of the biggest obstacles to their growth. Businesses can’t hire, boost employment and pay salaries if they aren’t being paid on time.
But there are tools that can help businesses to better manage these issues. For example, cloud accounting platforms allow them to automate chasing late payments, and predictive tools can give small businesses future cash flow projections.
Global datafication
Datafication describes what’s been happening across every industry for many years, often without us even knowing it.
It’s the process of turning parts of our lives and businesses into data, transforming things that were once unusable into something that could be tracked, analysed and acted upon. Banks, for example, use behavioural data to establish whether someone has a good credit record to grant them a loan.
As a result of global datafication, governments globally are pushing to give small businesses access and control over their data and how it is shared with third-parties.
Take open banking, for example. Open banking is where financial institutions open up their APIs so that third-party developers can build applications and services around them. Bank feeds that connect an SME’s business bank account directly to its accounting software can be created.
Open banking has the potential to play a transformational role in helping small businesses automate time-consuming financial processes like access to funding, bank reconciliation and VAT returns. Many of them will already be using tools enabled by open banking, but the potential is much greater.
It’s great to see forward-thinking banks like Nedbank, Investec, Sasfin, FNB and others opening up their APIs. We need to see more banks, financial institutions and technology companies following.
Government also needs to promote the benefits and support innovation that helps drive efficiency among small businesses in the long-term.
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