New technology is transforming business for SMEs, according to Gary Turner, MD EMEA of Xero.
How we finance and manage our business in today’s South Africa is changing thanks to the increasingly important role of technology. Key developments in financial technologies are freeing small businesses and entrepreneurs from the evils of spreadsheets, outdated systems and shoeboxes full of receipts.
Several key trends are set to have an increasing influence on how small businesses do business in South Africa this year.

Cloud-based accounting will become the norm
Xero research conducted last year found that 66% of SME owners cited technology as “very important” and 55% claimed that smart devices and cloud apps have made running their business easier. South African small businesses have been slow to adopt cloud technology, due to poor internet connectivity and concerns over digital security. This looks likely to change in 2017 however as companies continue to invest in their cloud capabilities and put increased pressure on local providers to improve their services.
Working in the cloud gives businesses a better overview of their finances and means that owners can stay connected to their data. Cloud software integrates with a whole ecosystem of add-ons, and includes features such as mobile receipt scanning, saving small businesses even more time and money.

Growth in digital payments
As technology helps small businesses understand what their accounts look like in real time, it is also transforming the way that business transactions are made and cutting down on the fees that SMEs have to pay.
Globally, tech giants such as Apple are driving demand for mobile payments. Although Apple Pay is not yet available in South Africa, the success of the South African equivalent, SnapScan, suggests that mobile payments are set to become increasingly commonplace in 2017. According to a 2015 FinScope survey, 37% of South African adults use digital payments monthly and this figure will only increase as connectivity improves. Only a few months ago, Mastercard’s Masterpass mobile wallet announced its arrival in South Africa through a partnership with SnapScan.

Crowdfunding and alternative finance is on the rise
According to Xero research, the majority of South African small businesses are self- funded, with 63% of SME owners reporting using personal savings while 20% found investment or a loan from a family member, partner or friend. Over a quarter (27%) of small business owners cited access to funding as the biggest challenge to starting their business.
New methods such as crowdfunding are giving small businesses access to that all important cash injection to raise money for R&D, projects or seed investment. African projects crowdfunded R1,7-billion in 2015, according to the the Afrikstart Crowdfunding in Africa Report, from 57 different platforms. Business and entrepreneurship accounted for 21% of this investment.
Innovative technology is reshaping financial services by putting pressure on traditional business models. The growing popularity of alternative lending platforms, including peer to peer, will see small businesses no longer relying on traditional investors and finding finance from peers.