# How accountants can improve financial planning and results through Open Banking to help SMEs
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-06-08
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: How Open Banking Can Help Small Businesses Survive
Meta Description: Discover why Britain's small businesses need to leverage Open Banking for timely financial information, as CEO Richard McCall explains the hurdles they
URL: https://financedigest.com/how-accountants-can-improve-financial-planning-and-results-through-open-banking-to-help-smeshtml

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**_Richard McCall, CEO of Armalytix, explains why Britain’s army of small businesses face a challenging road navigating the hurdles of tax deferrals, loans, and uncertain growth. Richard argues Open Banking is an invaluable tool that businesses and their professional advisors should use to get fast access to up-to-date financial information that helps maximise the upside of the recovery._**

The House of Commons library recently reported that, of the 5.98 million businesses in the UK, 5.97 million have less than 250 employees and 5.7 million have less than 10. This indicates the extent to which Britain remains a nation of small businesses.

**Shopkeepers and café owners**

Smaller businesses such as shopkeepers, independent café [owners and hairdressers are especially affected by downturns in the economy because they rely on a building a loyal customer base for return business](https://www.financedigest.com/how-banks-will-evolve-to-support-small-business-owners.html "How banks will evolve to support small business owners"). Additionally, the aftereffects of COVID-19 have been acutely felt at this end of the economy with many businesses collapsing due to the economic wreckage caused by several national lockdowns, that have [forced the closure of these kind of business](https://www.financedigest.com/analysis-uk-crisis-forces-off-kilter-businesses-to-halt-investment.html "Analysis-UK crisis forces ‘off kilter’ businesses to halt investment").

These [impacts have been mitigated in part by the swift actions](https://www.financedigest.com/the-fca-is-taking-immediate-action-on-customer-vulnerability-but-how-does-this-impact-advisers.html "The FCA is taking immediate action on customer vulnerability; but how does this impact advisers?") of The UK Treasury in offering loans, VAT deferrals and the furlough scheme to keep these businesses alive.  However, this means these [businesses are now faced with a complex set of challenges as government funding and financial support](https://www.financedigest.com/new-business-launches-to-support-it-professionalsfacing-mission-critcial-sector-challenges.html "NEW BUSINESS LAUNCHES TO SUPPORT IT PROFESSIONALSFACING MISSION CRITCIAL SECTOR CHALLENGES") is coming to an end. With the furlough scheme also ending in October 2021, company directors need to [consider how to bring back](https://www.financedigest.com/3-options-to-consider-when-you-owe-the-irs-back-taxes.html "3 Options to Consider When You Owe The IRS Back Taxes") employees and manage loan repayments that are likely to begin shortly.

**How accurate and timely financial information helps SMEs**

The starting point for making any informed businesses decision must involve access to financial information; you simply cannot [run a successful business](https://www.financedigest.com/4-signs-you-have-what-it-takes-to-run-a-business.html "4 Signs You Have What It Takes to Run a Business") without the numbers.

As many as 65 percent of small businesses do not have a business plan according to research by the UK’s SME Recovery Tracker (which is jointly [run by Corporate Finance](https://www.financedigest.com/scottish-finance-minister-kate-forbes-to-run-for-countrys-leadership.html "Scottish finance minister Kate Forbes to run for country’s leadership") Network (CFN) and Association of Chartered Certified Accountants (ACCA)).  These companies are unlikely to have finance directors or HR departments and will rely on sound advice from accountants and [financial advisors](https://www.financedigest.com/how-mifid-ii-will-impact-financial-advisor-communications.html "HOW MIFID II WILL IMPACT FINANCIAL ADVISOR COMMUNICATIONS") to provide them with information to make the right decisions.

![Richard McCall](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/richard-mccall-ceo-of-armalytix-450x450-1736838289704-compressed.png)

Richard McCall

Less than half of UK small businesses are VAT registered, meaning an accountant may only see their financial information on an annual basis, and even those that are VAT registered may only need to provide their [accountants with quarterly bank](https://www.financedigest.com/new-legislation-makes-switching-bank-accounts-simples.html "New legislation makes switching bank accounts “simples”") statements. This in turn gives the accountant a lot of data to retrieve and analyse at once – some of which will be three months old.  Given these volatile times, this only adds to the problem businesses face making the right decisions in uncertainty.

Even businesses that perform regular [financial checks find sharing banking](https://www.financedigest.com/financial-crime-is-the-chink-in-the-banks-armour.html "Financial crime is the chink in the banks’ armour") information more complex than it needs to be. The reality is that many [businesses rely on either photocopied bank](https://www.financedigest.com/challenger-banks-missing-golden-opportunity-to-steal-business-from-competitors-by-repeating-same-old-mistakes.html "Challenger Banks Missing Golden Opportunity To Steal Business From Competitors By Repeating Same Old Mistakes") statements, which need to be digitised, or sharing CSV files, which can be less than secure.

**How can [Open Banking](https://www.financedigest.com/open-data-represents-the-biggest-challenge-to-banks-in-a-generation.html "Open data represents the biggest challenge to banks in a generation") help?**

[Open Banking](https://www.financedigest.com/how-will-open-banking-impact-the-customer-experience.html "How will Open Banking impact the customer experience?") has been helping businesses and consumers access clearer and more effective financial planning since the service came into play in 2018.

Open Banking platforms allow apps and services to analyse and [understand financial](https://www.financedigest.com/10-ways-to-make-your-financial-model-easier-to-understand.html "10 Ways to Make Your Financial Model Easier to Understand") behaviour more transparently.  Open [Banking can then be used to provide access to relevant financial services](https://www.financedigest.com/73-of-employees-in-the-banking-and-financial-services-industries-are-looking-for-better-physical-and-mental-wellbeing-support-in-the-workplace.html "73% of employees in the banking and financial services industries are looking for better physical and mental wellbeing support in the workplace"), such as tracking spending and cash flow. For example, consumers may give an [app permission to analyse their spending habits which can then advise on which bank](https://www.financedigest.com/why-pay-by-bank-app-will-come-into-its-own-in-2022.html "Why Pay by Bank App will come into its own in 2022 ") accounts are the right ones for them.

Open [Banking for business enables small businesses around the country to authorise apps to access and share](https://www.financedigest.com/bank-shares-rise-after-credit-suisse-rescue-eases-crisis.html "Bank shares rise after Credit Suisse rescue eases crisis") specific and relevant financial information.  Doing so should be as simple as [accessing a banking](https://www.financedigest.com/hair-care-shouldnt-break-the-bank-transplant-surgery-should-be-accessible-and-affordable-for-all-men.html "Hair-Care Shouldn’t Break The Bank – Transplant Surgery Should Be Accessible and Affordable For All Men") app from a smartphone.

**The power of [Open Banking](https://www.financedigest.com/barclays-private-bank-opens-new-office-in-verbier-switzerland-for-2022-23-ski-season.html "Barclays Private Bank opens new office in Verbier, Switzerland for 2022/23 Ski Season") for small businesses**

Typically, accountants are [faced with a host of problems when collecting financial](https://www.financedigest.com/disconnected-customers-are-one-of-the-biggest-problems-facing-financial-companies.html "Disconnected customers are one of the biggest problems facing financial companies") data from clients. Company directors are usually busy working to tight schedules, [meaning accountants may not receive their bank](https://www.financedigest.com/banking-turmoil-means-recession-fears-are-creeping-back.html "Banking turmoil means recession fears are creeping back") statements at the first time of asking. Even when the documents are provided swiftly, they may be missing vital information such as incorrect dates or unclear formatting. Trying to analyse financial [data from a blurry photocopy after chasing the information for weeks is hardly an efficient way of working for accountants](https://www.financedigest.com/5-simple-ways-to-prevent-a-data-breach-from-putting-your-accountancy-practice-out-of-business.html "5 Simple ways to prevent a data breach from putting your accountancy practice out of business").

[Open Banking](https://www.financedigest.com/how-open-banking-will-change-the-banking-industry-in-the-next-10-years.html "How Open Banking will change the banking industry in the next 10 years") can cut hours off this process. Using a third-party app, an [accountant can request bank statement information from a client](https://www.financedigest.com/new-global-relationship-between-reckon-software-and-myfirmsapp-delivers-closer-interaction-between-accountants-and-their-clients.html "NEW GLOBAL RELATIONSHIP BETWEEN RECKON SOFTWARE AND MYFIRMSAPP DELIVERS CLOSER INTERACTION BETWEEN ACCOUNTANTS AND THEIR CLIENTS") which can be authorised within two or three clicks. Within this time, the client has provided specific access to the information requested and nothing more. This can all be achieved from a mobile device via one email.

[Open Banking](https://www.financedigest.com/asia-shares-bank-on-eventual-china-opening-oil-gains.html "Asia shares bank on eventual China opening; oil gains") makes business easier to manage for both the client and their accountant, but perhaps the most valuable outcome is the ability for accountants to provide small businesses with quick business advice, based on accurate and up-to-date information. It is hard to disagree with Peter Drucker’s statement “Entrepreneurs believe that profit is what matters most in a new enterprise. But profit is secondary. Cash flow matters most”. If your insights to cash flow are limited and irregular, you run the risk of causing irreversible damage to the business.

**Maximising recovery from the pandemic**

As Britain’s army of small businesses navigate the road to recovery from the strains and struggles of the past 16 months, they [need access](https://www.financedigest.com/55-of-uk-smes-unable-to-access-all-funding-needed-to-grow.html "55% of UK SMEs unable to access all funding needed to grow") to accurate financial information and advice to help maximise their recovery. Revenues and costs rarely grow in sync.  The post COVID [landscape is complicated by a potential increase in revenues being offset by the impact of deferred tax payments](https://www.financedigest.com/5-predictions-for-payments-landscape-in-2022-and-our-reflections-on-2021.html "5 Predictions for Payments Landscape in 2022 and our reflections on 2021") or bringing back staff from furlough.  Small business owners, many of whom have experienced the ultimate “stop/start” year, need to focus on maximising the opportunities open to them and working in a COVID safe way, rather than panicking about [bank statements or other financial](https://www.financedigest.com/why-banks-could-stand-to-learn-a-thing-or-two-about-financial-inclusion-from-fintechs.html "Why banks could stand to learn a thing or two about financial inclusion from fintechs") information.  Yet ironically the accountants (the people best placed to help them navigate the [financial future](https://www.financedigest.com/the-future-of-financial-services-tech-evolution-not-revolution.html "The future of financial services: Tech evolution not revolution ")) need swift access to up to date information to be able to support businesses to bounce back stronger.  Open [Banking is one of the ways](https://www.financedigest.com/5-ways-banks-can-compete-in-payments.html "5 ways banks can compete in payments") in which small businesses and their professional advisors can make the process of gathering information simpler and more effective.


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