A new report has laid out a digital roadmap that could catalyze up to a £57bn productivity payout for UK SMEs over five years.
The UK government's Making Tax Digital initiative (MTD), to digitize VAT in April of this year, will lead to annual benefit of £6.9bn or £46bn over five years in net gains in turnover and growth for the UK economy.
Volterra Partners' report titled, The Productivity Payout: UK Small Businesses and the Digital Economy, provides the first of its kind economic model built on predicted behaviors of small business owners as a result of social and financial drivers.
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According to the report, once businesses integrate technology to become MTD compliant, a 'digital snowball' effect is likely to occur as they experience spill-over benefits that will drive increases in SMEs' levels of productivity.
Impact of MTD on SMEs
While there are huge gains to be made from the adoption of digitization of traditional business practices, research from QuickBooks has revealed that one in five SMEs are still unaware of MTD and its associated impact.
The impact for each type of small business in the UK is substantial with MTD delivering a spill-over increase in productivity regardless of a company's size. For sole traders, the predicted average net gain in annual revenue is £1,900 while a traditonal small business with 10-49 employees can expect to see an average increase of £18,000 to their top line growth.
VP and UK Country Manager at Intuit QuickBooks, Chris Evans offered further insight on the report's findings, saying:
“Now is the time for small businesses to embrace digital with unabated optimism. Today’s report highlights that a digital-led approach will be transformational for small businesses, who are the backbone of the UK 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 cashflow management and allow them to get paid faster and access capital to grow, powering prosperity across the UK.”
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