Small and medium-sized businesses (SMBs) are the backbone of the economy, employing more Australians than any other sector. The past 18 months, however, have been particularly challenging for SMBs, which have been forced to innovate to deal with the shock waves created by Covid.
“The pandemic has highlighted the importance of technology adoption in helping small businesses innovate – increasing efficiency and productivity, attracting new customers in different markets, improving customer and employee experiences,” says the Australian small business and family enterprise ombudsman, Bruce Billson.
Tough times, however, invariably bring out the best in small business owners, with their ability to pivot, move quickly and react to change. These hallmarks have allowed many SMBs to embrace digitisation to increase efficiencies, cut costs and respond to challenges.
Many small business owners have embraced digitisation to respond to the challenges of the pandemic.
Chris Peck, executive general manager, public services, at SAP Australia, says: “With many SMBs now adopting a digital-first mindset, there is huge potential to accelerate transformation.”
This is why SAP commissioned the report The Connected SMB: Embracing Digital Strategies to Fuel Growth. “SAP wanted to understand the current state of digital transformation in this sector of the Australian economy, and how best to support SMBs in driving this trend forward,” Peck says.
With increased government support, new technologies and recognition that digitisation is no longer just the domain of the big end of town, many smaller organisations have already made the transition to a digital-first mindset and are embracing new services such as e-invoicing.
Why e-invoicing?
Both federal and state governments have recognised that e-invoicing is a crucial component of SMB digitisation, and the federal government has committed to transitioning to fully processing all invoices electronically by the end of June 2022, with most state governments also working through their approaches. For SMBs that deal with government, this will result in faster turnarounds, greater visibility and more accuracy, which will improve cashflow.
For SMBs in particular, e-invoicing has proved to be much more cost-effective than manual processing: a recent Deloitte study estimated that electronically processed invoices could save up to $20 in costs per invoice. With recent research commissioned by SAP finding that Australian SMBs (with 1-199 employees) process on average 168 invoices a month, this translates to a cost saving of more than $40,000 per year.
The Australian Competition and Consumer Commission estimated that in 2019 alone, error rates as a result of manual processing and incidents of paying fraudulent invoices cost Australian businesses as much as $132m.
A survey commissioned by SAP and conducted by YouGov this year found that among SMBs that had already made the switch or were transitioning to e-invoicing, the biggest drivers were saving time and money (75%), followed by efficiency, secure record keeping and improved customer services:
Saved money (32% mid-size, 26% small).
Saved time (48% mid-size, 39% small).
More secure record keeping (34% mid-size, 42% small).
Improved customer service/relations/offering (23% mid-size, 13% small).
Increased our efficiency (39% mid-size and small).
Getting started with e-invoicing
For many SMBs, the idea of transitioning to e-invoicing and other digital-first approaches can seem daunting at first, with some of the biggest perceived challenges relating to technology and software. For owners and managers unfamiliar with implementing such a project, it can be difficult to know where to begin, which suppliers to consider and whether the business can afford to invest in such technologies. Other key challenges that were identified in the survey included how to integrate the process into existing systems (36%), the effort and time involved (32%) and the costs (28%).
While all this can be daunting, it is comforting to know that of those SMBs that have implemented e-invoicing, 88% stated that it was easy to transition, with a third indicating that they were able to implement the change themselves.
That said, it is important to seek advice, guidance and support from subject matter experts and from other SMBs that have successfully made the change. Of those that have transitioned to e-invoicing, half sought help from IT professionals, either externally or internally, with a number of others taking advice from consultants, accountants and government services.
Transitioning to e-invoicing can feel daunting at first for business owners.
Continuing your digitisation journey
Many SMBs that have successfully transitioned to e-invoicing find that this can be the trigger to seek further opportunities for digitisation across their business. The benefits and cost savings that an e-invoicing process provides has for many businesses created an increased appetite to do the same with other processes. More than half of surveyed SMBs expected to complete all necessary digitisation within two years, including payroll (72%), forecasting (42%), debt collection (38%), customer experience (33%) and talent management (28%).
If you are an SMB considering digitisation and e-invoicing, there are six steps to consider to get started:
Do your research – take the time to work out where to start and why.
Consider different perspectives – consult with and learn from others.
Involve employees and suppliers – get everyone involved in the decision-making process.
Find the right partner – choose a technology supplier that understands your business.
Aim for total connectivity and real-time understanding of your business.
Prioritise the change and build incrementally.
Increasingly, and accelerated by the challenging conditions of the past 18 months, SMBs are making the decision to go digital, and many organisations have successfully made that transition. As an SMB looking to get started you should not feel alone.
At SAP we are committed to helping SMBs keep pace with change – 80% of our customers are from SMBs. We have solutions that will allow you to join the many other Australian businesses that are already enjoying the benefits of digitisation, keeping your business running today and wherever you go next.
Read The Connected SMB: Embracing Digital Strategies to Fuel Growth.
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