Technology for MSMEs: While poor access to finance and credit along with technology talent are the major challenges for small businesses, they often tend to burn out due to reasons including lack of proper financial planning and internal accounting.
Technology for MSMEs: Small and medium enterprises (SME) are gradually switching to digital book-keeping apps to record their business transactions. Over 50 per cent of all transactions are recorded using book-keeping apps by a significant number of SMEs, according to an SME survey by management consulting firm RedSeer conducted in August this year. SMEs used two undisclosed book-keeping apps to record 43 per cent and 48 per cent transactions respectively. The survey, however, didn’t mention the number of SMEs surveyed. While poor access to finance and credit along with technology talent are the major challenges for small businesses, they often tend to burn out due to various reasons including lack of proper financial planning and internal accounting.
The survey also revealed 67 per cent and 48 per cent small businesses using the two book-keeping apps respectively. “New age bookkeeping apps are seeing daily usage amongst large chunk of their user base- indicating increasing comfort,” RedSeer said in the survey published in October. While for the rest, the usage ranged from a few times a week (23 per cent and 31 per cent) to not even once a month (3 per cent for each app).
Digitizing transactions and recording payments of small businesses have emerged as a key opportunity for Indian startups as well. A slew of startups such as Tencent-backed Khatabook, OkCredit funded by Tiger Global, and IndiaMART-backed Vyapar etc. Digital payments are witnessing a growth of 12.7 per cent in India, according to a KPMG report even as the number of merchants accepting digital payments has gone up to over 10 million in the last two-three years. The global accounting software market is expected to cross $26,600 million by 2024 growing at CAGR of 8.92 per cent, according to Market Research Future report. Indian MSME sector contributes 29 per cent to the country’s GDP and nearly 50 per cent in total exports. The sector has so far created 11 crore jobs to which the government is expecting to add 5 crore jobs in five years.