Many organisations have been forced to fast-track their digital transformation strategies to maintain operations during the disruptions of the past year.
However, small and medium businesses (SMBs) still heavily rely on manual processes that are not sustainable and could contribute to business failure in the future.
Government initiatives and budget solutions, such as the $12.7 million funding recently announced for the Digital Solutions - Australian Small Business Advisory Services program, are helping to support business recovery. SMBs can’t, however, rely on these government solutions to resolve systemic business issues. Instead, they need to consider how their own internal processes are potentially causing their business to fail.
The pandemic has helped to highlight internal weaknesses for many SMBs. The best-in-class businesses have already addressed these weaknesses by automating manual processes. These businesses are now investing further in digital tools that support workplace flexibility and a remote work environment. In Australia alone, businesses that have adopted automation now have 98 per cent lower costs to process expense reports, and a 30 per cent overall increase in employee productivity.
SMBs that have progressed on their digital transformation journey are making automation part of everyday business processes across all areas of the business. Yet, there are still many Australian and New Zealand businesses that continue to rely on legacy, manual processes that cost them time, money, and the ability to remain competitive in the new digital business environment.
Manual processes are now rapidly becoming redundant due to the barriers they create for doing business effectively. This will become even more of an issue for SMBs that do business with federal government agencies as government departments adopt e-invoicing within the next 15 months. There are three key areas where manual processes are likely to have a direct impact on business performance in the near future, and can ultimately cause a business to fail:
1. Productivity and profit
Manual processes are resource-intensive, which involves additional employee cost and time to complete administrative tasks. They also impact productivity by diverting employees from higher-value activities that can drive business innovation and build revenue. For example, if employees need to manually enter expense receipts into a business system for each expense, this repetitive activity quickly adds up in terms of wasted employee cost and time when multiple expenses are uploaded each week. This is further compounded with manual approval processes that require managers to log into systems, check expenses, and provide approvals. When data is entered incorrectly, this entire process can take two or three times longer, which directly impacts the bottom line.
Aside from the logistical issues that can occur with manual processes, mundane, repetitive tasks impact employee satisfaction, which has a direct effect on worker motivation and productivity.
2. Slower response to market needs
To survive in business, organisations need to be fast to market and just as quick to respond to customer needs. Inefficient, manual processes slow response times for SMBs, which also impacts business agility and scalability during times of economic change. Being slow to respond to customer and market demands can cost the business its customers, as well as growth opportunities that are lost to competitors with much faster business processes driven by automation. As the adoption of e-invoicing rapidly grows among government agencies and large enterprises, small businesses that want to do business with these organisations but continue to rely on legacy, manual processes could be left behind.
3. Lack of visibility
Real-time insights into business performance are crucial for organisations of all sizes operating in today’s business environment. Businesses can’t control what they can’t see, and what they can’t see can hurt the organisation. For example, without real-time insights across all financial processes, it is easy for data errors, duplicate entries, and fraudulent activity to occur, which directly costs the business money. Even a small error, such as a decimal point in the wrong place, can severely impact profit, as well as cause compliance issues with legislative requirements that could result in penalties to the business.
In addition, outdated, inaccurate data makes it nearly impossible to make sound business decisions. Decision-making based on guesswork is fraught with risk, particularly in a dynamic business environment.
The reality for many SMBs operating in the current volatile and fast-paced digital business environment is they need to make strategic organisational decisions within minutes to stay competitive and relevant to the market. Manual administrative processes significantly impede this ability. These processes also create a high-risk business environment for SMBs because they are prone to data errors, duplicate entries, and fraud.
Within the next few years, business survival will depend on secure, automated solutions that deliver real-time business insights and ensure the accuracy of financial information. SMBs that plan to stay in business for the long term should invest in automated tools now so they can adapt and optimise their business processes to maintain a competitive edge into the future.