A new research report has laid out a digital roadmap that could catalyze up to a £57 billion productivity payout for U.K. SMEs over five years. And retail is set to be one of the biggest beneficiaries.
Making Tax Digital, the digitization of VAT in April 2019 will immediately catalyze an annual benefit of £6.9 billion in net gains in turnover and growth for the U.K. economy, proving that it is not all Brexit doom and gloom right now.
And if all SMEs in retail were catalyzed by MTD, the sector would see an annual benefit of £2.8 billion, the report claims.
These are the major findings of The Productivity Payout: U.K. Small Businesses and the Digital Economy – a new research report released by Volterra Partners in association with Intuit QuickBooks, the world’s leading accounting software provider.
The report describes a new economic model – built on predicted behaviors of small business owners as a result of social and financial drivers – which demonstrates that once businesses integrate technology to become MTD compliant, a ‘digital snowball’ effect is likely to occur as they experience so-called spill-over benefits.
These spill-over benefits will drive increases in SMEs’ levels of productivity, for example by enabling better cash flow and human resources management, and freeing time for more productive activities such as sales, marketing or training. All vital revenue driving activities for retailers.
The report goes on to say that having adopted one form of digital technology, businesses tend to adopt others, in turn saving more time and reaping the rewards from cumulative productivity benefits from digital interoperability.
However, the research also found that despite the huge gains to be made from the adoption of digitization of traditional business practices, one in four SMEs in retail are still unaware of MTD and its associated impact.
Chris Evans, VP and UK Country Manager at Intuit QuickBooks said: ‘Now is the time for small businesses in the retail sector to embrace digital with unabated optimism. This report highlights that a digital-led approach will be transformational for small businesses, who are the backbone of the U.K. economy.
‘For those businesses, the transition to digital will not be without stumbling blocks. However, it presents a huge opportunity to streamline operations, drive efficiencies and simplify tax. It will enhance cash flow management and allow them to get paid faster and access capital to grow, powering prosperity across the U.K.’
And this optimism was shared by one small business retailer, Hatters Promotional Merchandise, whose MD, Jo Shippen said, ‘As MD of a small business the focus is always on driving the team and business forward and accounts is often an area of pain. You need up to date financial information to make decisions to recruit, move premises, buy equipment and invest in technology and that needs to be digital.
‘Back in 2014, an industry colleague introduced me to digital accounting, suggesting I could do my bank reconciliation over my cornflakes! I can also pay suppliers and chase customers with a quick login and this has saved me time and money.
With retailers battling the multiple ill winds of Brexit uncertainty, low consumer confidence, rising costs, to name a few, it is heartening to be able to report some good news for the sector.
And with small to medium-sized retail businesses set to become the beating heart of our high streets, this couldn’t have come at a better time.