Small and medium businesses (SMBs) are a backbone of any economy as they contribute immensely to the country’s GDP, employment generation and exports. In UAE this sector constitutes of over 94% of the total businesses in the country. While they have high potential of growth, they are still ignorant to the immense benefits automated accounting solutions can bring.
A recent report by Tally Solutions and Kantar surveyed 194 SMBs across UAE who use manual and excel for their accounting purposes and found out that 44% of them are not aware of any business management software.
The study was conducted among business, where accounting is done manually or using excel in UAE across 3 broad verticals of manufacturing, trade and services. The key objectives of the study were to determine the awareness and perception towards Business Management Software, along with business priorities, challenges and current technology adoption.
82% businesses stated increasing profit as their key business priority, providing better service quality (65%) and attracting and retaining customers were amongst other key business priorities. While talking about the key business challenges monitoring performance (43%) and financial management (42%) were the key business challenges.
To overcome these challenges, Mr. Vikas Panchal Business Head of Tally Solutions in the Middle East, said, “It is important that businesses adopt automated solutions to better organise, streamline, and automate their financial operations. Automated accounting, for example, will ease out the process of account maintenance. Additionally, implementing such a system will release them from time-consuming processes brought about by the current set-up; eliminate the tedious paperwork and inaccurate information; reduce human errors; prevent cases of misplaced invoice and other documents; and result in lower costs and higher savings.”
The study also gave insight on the technology adoption of these SMBs. According to the study, the excel users have moved up the technology curve and about 37% of the businesses have both desktop and laptop which is significantly lower for manual users. The alarming thing to notice is that even though the awareness is less, amongst those who are aware of Business Management Software only 45% businesses have plans to adapt automation for daily business operations.
Commenting on this Mr. Panchal further added, “Leveraging state-of-the-art but cost-efficient business management software is fundamental to the operations of any businesses regardless of their size. Adopting such a modern software program is especially critical given the VAT system implemented by the government since the start of 2018.”
“A high percentage of small companies in the country is still utilizing manual in-house accounting system due to the prevailing perception in the market that this VAT-compliant system is for larger companies only. However, the fact is that even, small enterprises need to eventually shift to an advanced accounting system much like what a number of major corporations have done to achieve higher business efficiency and productivity as well as guarantee correct and easy VAT compliance, among other benefits,” he added.
Further, the findings show high awareness among businesses about common activities such as accounting, billing, VAT filing, and inventory management that would require the use of accounting software. When asked about the major benefits of using a business management software, manual users cite that it would lead to automated accounting, which would help ease out the process of account maintenance.
While there is no additional hardware or software investment required when maintaining accounts either manually or through excel, many small businesses admit that current practices are time consuming. As per the report, manual users cite invoice generation as well as historical data tracking as some of their major challenges. For the part of excel users, performance monitoring and financial management are some of their key concerns in relation to lack of software investment.
Among the surveyed businesses not much differences were observed in accounting practices of different segments. Excel was preferred by those who have done secondary education or above, while businesses with less than five employees prefer using manual mode of accounting especially those with less than AED 2 million turnover.
There is a need to engage more with the small business sector to change their perception and convince them to make the shift to software programs, which, when looked closely, are going to be more cost-efficient in the long run. In today’s modern age, higher demand for efficiency is in order.
Business software programs are designed to deliver this benefit and more, including higher productivity and compliance rate. To be able to compete and stand out in the market effectively, SMBs need to focus on how to be competitive and this is one way to do it.