SMEs need to take advantage of innovation agenda

Innovation, food
ID:121209668

The NISA aims to encourage and grow innovation through numerous measures, including tax incentives for investors into early stage innovation companies.

While it is good news for the Coalition Government that they have retained power, our thinkBIG 2016 research reveals that less than half – 45% – of SMEs expect to benefit from their $1.1 billion National Innovation & Science Agenda – NISA.

In an attempt to boost both commercial returns of publicly-funded research, and productivity within the Australian economy, the NISA aims to encourage and grow innovation through numerous measures, including tax incentives for investors into early stage innovation companies.

Instead of assuming they won’t benefit from either party’s innovation initiatives, we urge SMEs, especially start-ups, to seek advice from an R&D tax specialist to see how they can qualify for them.

Tax incentives for early-stage startups would be a highly cost-effective way to increase your company’s R&D output, and SMEs should watch out for greater disclosure on the rollout of such initiatives.

While it’s still early days, he says SMEs should be encouraged by an initial $22.6 million that’s just been committed to 11 industry-led projects within Australia’s solar, scram-jet and oyster sectors as part of the first round of the Cooperative Research Centre-Project – CRC-P – program.

In order to develop a high-tech Australian economy, we expect future phases of the innovation agenda to target more established businesses by boosting the availability of later-stage capital, and SMEs need to watch this space closely.

Cloud technology and business lending nexus

Given the mass migration towards online accounting revealed within thinkBIG 2016, it is possible that business lending and the cloud are becoming more closely linked.

SME investment in cloud-based accounting solutions has increased by 178% year-on-year, which is consistent with a 31.8% year-on-year growth in the uptake of bank debt recorded within the thinkBIG survey 2016.

When businesses run cloud accounting solutions, it’s simply quicker and easier for lenders to access the data they need and assess the risks on which lending decisions are made. It’s likely this easy and transparent access to crucial information is having a material impact on the number of SMEs receiving bank debt.

Cloud accounting aside, just over half of SMEs – 51% – also use finance and business applications/tools to improve their business productivity.

Costs containment is the single biggest driver of the search for more efficient ways of operating, and we expect the uptake of both cloud accounting, finance and business applications/tools to increase over the next 12 months.

With 97% of Australia’s 1.55 million SMEs employing less than 19 staff members, according to the Australian Bureau of Statistics, it’s hardly surprising that a cloud-delivered infrastructure can help them capitalise on previously unaffordable sophisticated online tools and digital solutions. These businesses simply don’t have the internal resources to manage their finances with the same level of sophistication and complexity as is offered by these affordable tools.

Andrew Graham, National Head of Business Advisory, RSM Australia