For some small businesses, taking steps to digitize might feel like a game of Frogger. How does one know when to leap into a new technology without getting hit with issues like implementation problems, technical challenges and the threat of a wasted investment? What’s more, how can a business feel confident in embracing a new technology when the next generation of an innovation could be just around the corner?
These anxieties are holding many SMBs back from making progress. That’s not to say technology is entirely left out of the small business’ back office: a report published from the U.S. Chamber of Commerce found that 79 percent of SMBs surveyed said they’re using digital tools to communicate with customers and suppliers, with similar penetration rates found in SMBs’ efforts in sales, customer information and advertising.
Pushing past the basics and into a new threshold of technological adoption takes some work, though. Pieter Reel, product owner at small business Software-as-a-Service company Teamleader, has encountered this challenge before.
“SMBs are still making rather basic changes in their business processes – shifting toward cloud solutions for CRM, invoicing, project management,” he recently told PYMNTS. Awareness of the need to digitize is growing, he continued, but entrepreneurs still struggle.
“One of the things that holds SMBs back is the fear of change,” said Reel. “They lack the resources to change their way of working regularly, and are looking to future-proof solutions. They are afraid that integrating new tech in their existing workflows might slow down the process and harm their SMB.”
Invoicing is one category that can see significant benefits from the digitization process, and it could serve as a catalyst for further digitization into other areas, especially payments and accounting. The impact and ROI of electronic invoicing can be more immediate, too. According to an EY report on eInvoicing adoption published earlier this year, it costs more than $8 to issue a single paper invoice, compared with $0.35 for an electronic one.
In Europe, where Teamleader is based, eInvoicing volume grew by 29 percent between 2015 and 2016, with even greater increases in the B2B and business-to-government spaces, according to the European eInvoicing Service Providers Association.
Adoption is undoubtedly on the rise, but Reel noted that some small companies are still not yet partaking in the trend.
“SMEs need to make and take time to change their way of working. They often need to adopt a new system, and change their habits in handling invoices,” he said. “We see that this is a big challenge for especially the more traditional SMEs, compared to younger, more digital-savvy startups.”
One of the largest hurdles for a small business to overcome is the lack of a document that can be visualized and read by a human, he added. Hybrid solutions, in which eInvoices are generated in both XML and PDF formats, provide compliance with local tax and eInvoicing regulations and can be easily integrated into buyers’ and suppliers’ back-end systems, yet the PDF offers human professionals the ability to retain a more traditional style of billing.
The knock-on impact of eInvoicing can be expansive, supporting digitization of payments, accounting, treasury, customer relationship management and other functions. Reel pointed to more efficient supplier payments, and the ability to more easily access, share and analyze data, as two particularly strong benefits.
“With electronic invoicing, the control of the supplier grows. You are 100 percent sure that the buyer received the invoice,” he said, adding that business owners save time on manually chasing after unpaid invoices.
“eInvoicing enables a more efficient payment flow because the data is shared in a structured format and can be automatically imported into payment systems,” continued Reel. “This results in a faster payment and healthier cash flow [for] SMEs.”
On a broader level, eInvoicing adoption can open entrepreneurs’ eyes to the benefits of data sharing in general. With GDPR and PSD2 regulations in Europe coming into effect, and more FinTechs integrating with other service providers, data sharing can offer business owners a holistic view of the enterprise – but only if they have the electronic data to begin with.
Reel said regulatory and industry initiatives to digitize data and support cross-platform sharing certainly help small businesses gain greater choice in the products and services they use. A less obvious benefit, though, is using solution providers that are required by law in Europe to comply with data protection rules.
“By using integrated software that is compliant with data protection regulations, SMBs don’t have to worry or spend money in order to comply with the regulations,” he said.
From a lack of understanding of GDPR rules to an inability to overcome hurdles to technological adoption, small businesses have their work cut out for them to go digital. Taking it one step at a time can have a greater effect than some entrepreneurs may think, however.
Reel cited Teamleader’s own analysis, which supports this notion. “SMBs that consider digitization and embrace new technologies have a better view on their net steps, and have more faith in succeeding as a company,” he said.