Claimed to be the largest study of its kind into digital capabilities of the UK's SMEs and charities, the research shows that 99% of SMEs and charities have now moved online, up from 92% and 76% respectively since the report was first commissioned in 2014, yet only 21% of businesses are gaining a transactional benefit from trading online.
The report points out that businesses which embrace advanced technologies - including cloud IT, online accounting software and digital training tools - generate more than £100,000 in additional annual turnover than those without.
It adds that 2.5 million businesses are also saving time through digital, more than twice as many compared to 2014. SMEs and charities with advanced digital capabilities are able to save a day a week, showing that the benefits of digital go beyond the bottom line.
Nick Williams, managing director of commercial and business banking transformation at Lloyds Banking Group, said: "Businesses and charities are seeing that moving online is not only helping increase revenue, but it is also improving productivity levels.
"The potential £85bn in revenue that SMEs could generate demonstrates the tangible impact of advancing digital capability and skills."
Minister for Digital Margot James added: "This Index provides vital insight for government and helps us develop policies to boost people's digital skills. We are committed to building a world-leading digital economy that works for everyone and through our Digital Skills Partnership have delivered more than 2.5 million training opportunities."