Financial struggles SMBs face and how accountants help 

Small and medium-sized businesses are vital to the economy, as they create jobs, drive innovation, and contribute to local communities. According to the 2024 Business population estimates for the UK and regions, small and medium-sized businesses accounted for 99.8% of the business population — 5.45 million businesses were small, and 37,800 were medium-sized. 

Unfortunately, many SMBs face significant financial challenges that can threaten their growth and financial stability. Thankfully, with support from accountants, business owners can overcome these challenges, allowing their companies to flourish! 

Intuit worked with Dr Chris Brauer from Goldsmiths, University of London, Symmetry Research, and the Association of Chartered Certified Accountants (ACCA), to conduct a first-of-its-kind academic study. 

We looked at the correlation between the use of accountancy services and revenue growth among these businesses by employing rigorous methodologies mirroring established research models,

This study also included a survey of managers and decision-makers from 4,000 SMBs across the UK, exploring how their reliance on both internal and external accountants and bookkeepers affects their performance. 

In this blog, we’ll discuss some of the main financial challenges business owners face according to this survey, looking into what this means for them and how they can overcome these struggles with expert support and advice, empowering SMB owners to tackle any financial hurdles confidently. 

The main financial challenges faced

SMBs face countless operational and economic challenges that can impact finances and overall business success. 

Managing expenses

Our survey revealed that 34.6% of sole traders find keeping track of expenses challenging, and 30.3% of business owners with 50-100 employees agree. 

Tracking expenses is crucial as it lays the foundation for financial stability, sustainable growth and informed decision-making. Monitoring expenses can help manage cash flow effectively, identify any cost-saving opportunities, and help businesses plan for the future and prepare for any unexpected challenges. 

Monitoring expenses could be challenging for SMB owners if they have limited business time and resources.  A lack of financial expertise could also make it difficult to categorise and track correctly and effectively.

General bookkeeping 

Proper bookkeeping provides an accurate and clear record of a business's financial transactions, allowing SMBs to effectively improve their financial management, spot and reduce errors, and ensure legal and regulatory compliance. This process also helps businesses create detailed financial reports, such as balance sheets and profit and loss statements, which are essential to understanding financial health, planning for growth and facing any obstacles such as unexpected financial loss. 

However, the survey revealed that 34.4% of sole traders and 30.3% of medium-sized business owners struggle with general bookkeeping. 

Similarly to tracking expenses, SMBs may find this aspect of finance management challenging due to limited time and resources — business owners are heavily involved in multiple aspects of the business, especially when it’s new. Without a dedicated bookkeeper, this task often falls on the business owner, who may not have the required knowledge or experience, causing them to become overwhelmed.

Long-term financial planning

Long-term financial planning refers to analysing a company's current financial position, setting business goals and strategising how to meet the targets. According to our survey amongst SMBs within the UK, 29.2% of sole traders, and 33.3% of businesses with 50 to 100 employees find this task difficult.

Business owners may find it challenging to plan ahead because of competing priorities and a rapidly changing business environment that benefits from a reactive approach. However, long-term financial planning, which often entails forecasting financial needs, and implementing strategies, offers many benefits to support sustainable growth, financial stability, and profitability.

Filing tax returns on time

SMBs often struggle to submit taxes on time due to a combination of time constraints, a lack of resources, and ensuring compliance with complex tax regulations. Our survey revealed that 32.1% of sole traders face this challenge, and 24.2% of businesses with 50 to 100 employees. Limited financial knowledge could also contribute to missing tax deadlines, as business owners may put off the task in fear of making mistakes or being non-compliant. 

Both businesses and individuals need to file and pay taxes on time to avoid unnecessary expenses — tax authorities can impose fines, late payment fees, and interest on overdue taxes. Filing taxes is also a legal obligation, so failing to do so could result in compliance issues and even legal action. 

Keeping track of cash flow

According to Intuit's survey, 29.6% of small businesses and 24.2% of medium-sized businesses struggle to keep track of their cash flow. However, this action can support decision-making, prevent debt, and enable growth by identifying potential problems to seize opportunities and sustain operations effectively. 

Businesses often struggle with keeping track of cash flow due to various obstacles, such as poor financial planning that leads to unexpected shortfalls. Inconsistent revenue streams can also make it hard to predict and manage, and a lack of financial literacy can make it difficult to interpret cash flow data or implement effective tracking systems.

How can accountants help?

Accountants play an important role in supporting SMBs with managing their finances efficiently and ensuring businesses have a clear understanding of their financial health while maintaining accurate and organised records.

Tax accounting provides vital support, such as ensuring businesses comply with all tax laws, helping with preparing and submitting returns like Self Assessment on time and accurately, and minimising tax liabilities and identifying deductions. 

When it comes to long-term financial planning, accountants can offer insights into growth opportunities, investments, and risk management which can help businesses maximise returns, reduce financial uncertainty, expand, and align with their future goals.

Accountants can also better track and manage expenses by incorporating categories for tax purposes, using automated tracking tools, analysing spending patterns and offering achievable cost-cutting measures. Similarly, they can manage and improve cash flow more effectively by analysing incomings and outgoings, creating forecasts, and developing realistic budgets to maintain financial stability.

Benefits of SMBs working with accountants

As well as supporting business owners with the above financial management challenges that many face, accountants can benefit the wider business in many ways. More than two-thirds of SMBs surveyed strongly agree that accounting services strengthened their financial report. 

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Improved business growth

Working with an accountant allows SMBs more time to focus on strategic initiatives and wider business goals, such as expanding into new markets — according to our survey, - nine hours a week can be saved by using accountants. A clear financial plan also enables informed decision-making about growth opportunities. 

Accountants can also support revenue improvements — according to our survey, revenue increased by 11.5% for SMBs using accounting and bookkeeping services, compared to those that don’t. 

Competitive edge

Accountants can provide insights, improve financial efficiency, and help businesses allocate funds effectively, which enables business owners to invest and provide extra time and resources into other areas such as marketing, hiring employees, technology, etc, strengthening the business's position in the market and contributing to sustainable growth.

Increased stakeholder confidence

Businesses with strong financial management that comply with tax laws and regulations can enhance their reputation among investors, lenders, and partners. The trust built can bring in new funding opportunities and other collaborations that can support future prosperity. 

Ensuring financial stability, supporting long-term planning, and managing risks helps to position businesses for sustainable growth and long-term success. Accountants help businesses build resilience, especially during economic challenges. 

For many SMBs, financial challenges can hinder their stability and growth. These hurdles can often overwhelm business owners, but with the support of accountants, navigating these obstacles becomes more manageable. 

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