The UK is now one of the easiest places in the world to launch a business, with more than 1,100 new companies starting each day according to government statistics. This is a great achievement, but more needs to be done to ensure companies are able to grow and scale up. This points to the important role that data can play in fixing the UK’s productivity puzzle.
Xero’s Small Business Insights platform provides insight into the performance of over 300,000 small businesses across the UK who use Xero. This insight can not only help business owners understand and improve the performance of their own company, but it can help inform government decision-making on improving productivity for small businesses across the UK.
As the UK’s most widely used online platform for small businesses, what we see are the practical issues that need to be resolved. Barriers to growth often break down into three areas: insufficient access to capital, an absence of key business skills and minimal take up of relevant business technology.
How technology can help
Software and online tools provide one of the best, and quickest, ways to save time and increase productivity, with cloud technology leading the way. Cloud computing can help level the playing field so small firms can compete with big ones. Research from our Digital or Die report shows that a quarter (26 per cent) of small business owners say that cloud accounting software helps them manage their accounts in less time.
With modern accounting tools such as Xero, labour-intensive tasks become automated or streamlined, saving a businesses a huge amount of time. For example, data flows into the software directly from a source in real-time – such as a bank, invoicing system, point-of-sale terminal, or expense application. Instead of wasting time transposing numbers, business owners and advisors can simply sanity-check the figures. This means the risk of human error is all but gone and both are given time back to focus on running and improving the business.
The benefits of integration
Additionally, with live bank feed integrations businesses and accountants can view, edit and add comments as they go. Storing financial data such as this in the cloud means collaborative access is made simple and real-time information gives way to more intelligent forecasting decisions. And with banks and others being able to access real-time data on small businesses, it makes it easier to make the case for funding.
Xero also seamlessly integrates with more than 700 apps, which use data to help improve productivity. For example, cash forecasting with Fluidly or using data to streamline application for funding with iwoca.
Data analysis has always been useful, but access to real-time data is becoming increasingly important to all aspects of business. The data world is shifting; rather than analysing data and drawing conclusions from a series of past events, systems now work in real-time to deliver insights on what’s going on in that business right now.
For the accountant advising the small business, real-time data enables them to understand what’s happening in real time and provide more accurate and more timely advice. This speed and efficiency from real-time data means time is saved and productivity can be increased.
For the business owner, the Xero dashboard updates in real time, enabling them to get an accurate picture of their business and keep on track of the finances. At a glance, business owners can keep an eye on cash flow and see all bank balances, invoices, bills and expense claims. Having real-time financial data at their fingertips means businesses can respond quickly and make informed business decisions.
Data driven accounting will only become more integral to the sector in the next five years, especially with Making Tax Digital for VAT. By adopting the right technology, small businesses can benefit from anytime access to real-time data, increase efficiencies and save time. This should not only help them increase their own productivity but also benefit the economy as a whole.
Edward Berks, EMEA Director, Platform Business at Xero
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