Dext - Thought Leadership: Accounting for SMBs
Bridging the Tech Divide: How Accountants and Bookkeepers Can Empower UK SMBs
From soaring costs and tax changes to global trade uncertainty and shifting customer demand, UK small and medium-sized businesses (SMBs) are navigating one of the toughest periods in recent memory. The entrepreneurial spirit in Britain is alive, but it’s under immense strain with many owners spending more time firefighting than focusing on growth. Paul Lodder, VP of Accounting Product Strategy at Dext, unpacks the challenges for small and medium businesses.
As part of our Dext Built for Bigger Things campaign, we surveyed 500 UK SMB leaders to uncover their most pressing challenges and understand how they’re navigating the increasing burden of financial admin during this time.
One of our most striking findings is that just over a third (38%) of SMBs currently use an external accountant or bookkeeper, meaning the majority of entrepreneurs are facing this storm without professional financial guidance. This lack of support has exposed a widening disconnect between the accounting & bookkeeping profession and the SMB community - a disconnect that is as much about technology as it is about advice.
According to the IFOL (Institute of Financial Operations & Leadership), three-quarters of UK accounting firms are investing in cloud and automation, and over half are exploring AI. Yet, 58% of SMBs remain bogged down in manual processes. The result is inefficiency, missed opportunities, and increased risk at a time when resilience has never been more important.
With this in mind, where can accountants and bookkeepers provide the most value and how can technology be the bridge that empowers them to better serve their clients?
Paul Lodder,
VP of Accounting Product Strategy at Dext
The Cash Flow Problem
Cash flow is the lifeblood of any business and, without it, even the most promising companies can quickly suffocate. Even in a stable economy, it’s a topic which is a constant headache for most businesses but today’s environment - with inflationary pressures, supply chain disruption, and unpredictable demand - has made it an existential issue for many.
According to our research, 46% of UK SMBs have faced cash flow issues or turned to emergency funding in the past 12 months, reinforcing the fact that cash flow isn’t just about growth in the current climate, it’s a matter of survival.
The scale of the issue is not confined to smaller firms either. Household names such as Thames Water, Superdry, Lycamobile and Jaguar Land Rover have all reported cash flow challenges in recent years, citing issues such as tariffs, falling consumer demand, and the cost-of-living crisis. But whilst they may eventually weather the storm thanks to their scale, small and medium-sized businesses rarely have the same luxury. Once cash dries up, many cannot recover.
This is why cash flow is consistently ranked as the number one concern for SMB owners. But through technology, accountants and bookkeepers have a unique opportunity to turn this challenge into an area of real value. By equipping their clients with the tools and processes to monitor cash flow in real time, they can help entrepreneurs anticipate issues before they become critical, and shift from a cycle of firefighting to one of proactive planning.
Daxin COO Yue Hong Meets with Daxin Saudi Chairman Abdullah Fahad Al sahli. Credit: Daxin Global
The connected leader can leverage outsourcing to access capabilities that may not exist within their organisation. Greater complexity within the service model means considering the opportunities that partnering can deliver, rather than building out a costly tech stack aligned to that complexity. To do this effectively, the entire talent strategy must be reimagined to reflect a redefined set of core competencies aligned to emerging services.
As outsourcing becomes integrated into strategic operations, accessing and leveraging data will be essential. This will supercharge governance and risk models, allowing leaders to focus on collaboration and embed trust over control.
Eliminating Manual Processes
A significant driver of the cash flow challenge is outdated, manual bookkeeping. Our research found that 58% of SMBs still rely on manual methods, while only 4% have fully automated their processes.
For entrepreneurs juggling multiple roles - CEO, HR manager, marketer - bookkeeping can easily slide to the bottom of the list. Yet without accurate records, business owners cannot truly understand their cash position. Worse, errors from manual entry can create false confidence in financial health, only for problems to surface later when it’s too late.
This is where technology presents a huge opportunity for accountants and bookkeepers to deepen the value they provide. Through the introduction of modern accounting software and automation platforms, they can help their clients capture and categorise financial data - expenses, invoices, and bank transactions - automatically, removing the need for excessive time spent entering receipts into a spreadsheet or chasing missing paperwork.
This also translates into cleaner data sets and far less time spent correcting errors, giving them the space to move beyond compliance and towards strategic advisory work. With automation in place, conversations can shift from “what happened last quarter?” to “what’s likely to happen next?”, adding the kind of forward-looking insight that SMBs need most in this rapidly changing climate.
Boosting Lending Credentials
Access to finance remains one of the most significant barriers to SMB growth. The government’s recently announced £4bn funding package for SMBs as part of its Small Business Plan was welcomed by entrepreneurs across the country, but securing capital is not always straightforward.
While lenders consider big-picture factors such as market potential, leadership and growth strategy, one of the most critical yet overlooked elements is financial transparency. Lenders want reassurance that businesses understand their numbers, manage risk responsibly, and can meet repayment obligations.
This is where accountants and bookkeepers can be transformative. Leveraging tools that provide real-time visibility of cash flow, income and expenses, they can help their SMB clients present a clearer, more compelling case to lenders and investors. A business that can produce instant, accurate financial reports inspires crucial reassurances and confidence from lenders.
With small and medium-sized business owners already losing sleep over financial uncertainty, knowing they’re in a strong position to access funding if needed can make a huge difference, both to the future of their business and to their own peace of mind. With this in mind, it’s vital accountants and bookkeepers showcase the invaluable resources at their disposal to equip their clients to make this a reality.
Strengthening Forward Planning
Our survey found that 54% of SMB owners believe today’s climate is even more unpredictable than COVID-19, and over half fear that another cost increase could put them out of business entirely. In such a volatile landscape, reactive solutions are no longer enough.
Forward planning, built on accurate and timely data, is essential and is where accountants and bookkeepers can become true strategic partners. By mapping out potential scenarios - whether it’s rising costs, falling demand, or new regulations - businesses can prepare strategies in advance rather than scrambling to react. But this only works if the underlying data is reliable and current. If a business is relying on spreadsheets updated months ago, the insights are already redundant.
Here, accountants and bookkeepers can deliver real value by implementing systems that provide real-time financial insights. For a startup still finding its feet, this means knowing exactly how much cash runway remains. For a scaling business, it could mean modelling different growth paths and their impact on working capital.
Planning cash flow across short, medium and long-term horizons allows businesses to anticipate when additional funding may be needed and when opportunities for investment arise. This type of planning is no longer a luxury - it’s a necessity in today’s uncertain market.
Tech as a Gateway to Greater Value
Despite the clear benefits of automation and AI, many UK SMBs remain stuck in manual processes. This is more than just a time drain; it’s a growth killer, increasing the risk of error, limiting access to funding, and leaving businesses vulnerable to shocks.
Accountants and bookkeepers have a vital role to play in changing this narrative. By helping clients embrace digital tools, they can relieve the burden of admin, improve accuracy, and give SMB owners the confidence to focus on growth.
But to do so, accountants and bookkeepers must also adapt. Building AI skills - understanding what tools to use, when to use them, and how to translate data into insight - is what will separate the good advisors from the indispensable ones.
The opportunity is enormous. By bridging the technology divide, accountants and bookkeepers can not only strengthen their own practices but also equip Britain’s small and medium-sized businesses with the resilience and clarity they need. In a period of unprecedented uncertainty, that support is not just beneficial - it's essential.
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