ULTIMATE OUTCOMES

Headlines

The research undertaken for this Impact Report gives a unique insight into how these services are helping small businesses improve productivity and efficiency and providing additional insights into business performance.
Improved financial decision-making - a very high proportion of small businesses reported that services provided them with better insights into business performance (+73% net agreement), improved decision-making (+75%) and managing late payments (+63%).
Enhanced productivity and efficiency – we found very strong evidence that these services were helping them to improve business efficiency (+82%) reduce internal costs (+48%) and reduce external costs (+53%).

It was vital to assess whether the use of open banking-enabled cloud accountancy services delivered long-term positive outcomes in terms of enhancing small business productivity and efficiency and providing additional insights into business performance. These are the stated outcome goals under the Framework, which we are seeking to identify and track.

Data-driven insights to support decision-making

Open banking aims to give small businesses the means to control finances more effectively, with real-time visibility of relevant data and insights to make better decisions, manage cash flow and reduce the cost of their operations. To assess the impact of open banking-enabled cloud accounting services, we framed several questions that explored these outcomes and goals. We asked users to indicate on a five-point Likert scale the extent to which they agreed with several statements. The responses are set out in the tables below.

Enhanced productivity and efficiency

Business efficiency

Ultimate outcome measure 1

"You are able to manage your business more efficiently"

Net agreement: 82%

Improved information sharing

Ultimate outcome measure 2

"It has made it easier to share information and collaborate with your accountant"

Net agreement: 70%

Improved data management

Ultimate outcome measure 3

"You have a more reliable and secure back-up of all your financial data"

Net agreement: 77%

Internal cost saving

Ultimate outcome measure 4

"You have reduced internal costs"

Net agreement: 47%

External cost saving

Ultimate outcome measure 5

"You have reduced your external accounting costs"

Net agreement: 53%

Business efficiencies and cost reductions

The first series of survey questions examined the extent to which small businesses feel that they are seeing efficiencies and cost reductions by using cloud accounting packages. The data shows that these services appear to be driving a set of extremely positive outcomes for small businesses. 84% report that they are seeing improved efficiencies.

Improved data sharing and management

A high proportion of respondents said they were benefiting from being able to share data more easily with external advisors (73%) and were benefiting from improved data management (79%) as their data was more effectively and reliably stored. There were no significant differences in responses across each of the three sub-groups in relation to the first three ultimate outcome measures. While most small businesses also indicated that use of cloud accounting services was resulting in internal and external cost savings, fewer businesses reported this benefit, and the picture was more nuanced across the sub-groups (see figure 26). This is not surprising, given that smaller small businesses with few employees are less likely to significantly cut their cost base through reductions in headcount. This research does not enable us to quantify the benefits derived by users, or the impact of open banking functionality within these services. However, it is reasonable to conclude that the benefits of these services are tangible, given that respondents typically pay for them and believe they deliver value for money. We do know from the survey itself that 45% of all small businesses reported that their use of the accounting software means they no longer need external accountancy support at all. This represents a tangible cost saving.

Figure 26: Research findings: cost savings across different-sized small businesses

Internal cost saving

Source: Marketing Means Survey (832 respondents)

External cost saving

Source: Marketing Means Survey (852 respondents)

Enhanced financial decision-making

It is also noteworthy that 79% of businesses (84% of the largest small businesses) agreed that their use of cloud accounting services had helped them to make better business decisions, a core objective of open banking.

Improved insights

Ultimate outcome measure 6

"You have more immediate and accurate insights into how your business is doing"

Source: Marketing Means Survey, 809 respondents

Net agreement: 73%

Improved decision-making

Ultimate outcome measure 8

"It helps you make better business decisions"

Source: Marketing Means Survey, 860 respondents

Net agreement: 75%

Similarly, 77% of all small businesses (80% of the largest small businesses) agreed that they had improved insights into business performance, an area many small businesses find challenging. Recent research from the Federation of Small Business (FSB)15 found that 72% of small businesses struggle to accurately forecast their earnings for the year, suggesting that these new insights are particularly valuable.

Late payments

The position on late payments also proved positive, although less clear-cut, with 70% of small businesses reporting that the use of cloud accounting services had helped them manage late payments.

Managing late payments

Ultimate outcome measure 7

"It has helped you manage late payments and chase overdue invoices"

Source: Marketing Means Survey, 858 respondents

Net agreement: 63%

We know that late payments are a significant issue for small businesses, with the FSB reporting that they impact one third of small businesses16. Late payments are a complex issue, and cloud accounting cannot solve the underlying causes. However, the evidence that 7 out of 10 of cloud accounting users found that the service helped them manage this complex and damaging issue is a welcome finding.

"Late payments are complex, and cloud accounting can't solve the underlying causes. However, the fact that 7 out of 10 of cloud accounting users found the service helped them manage this damaging issue is a welcome finding."

Figure 27: Research findings: improved late payment management across different-sized small businesses

15FSB, A Duty to Reform, 2021. See here 16FSB, Small Business Index, 2022. See here