Why SMBs should think big about AI investments in 2025
Securing talent, making strategic investments, and fostering long-term growth remain key hurdles for small and medium-sized businesses (SMBs), in part due to limited financial resources. With fewer long-term lending options available, many SMBs are left relying on short-term credit to manage essential expenses. A recent survey underscored this challenge, revealing that a third (33%) of UK small businesses had placed over 25% of their monthly expenses on credit cards over the past year.
As SMB owners navigate economic uncertainties, market fluctuations, and policy shifts, it's understandable that investing in technologies like artificial intelligence (AI) may not seem like an immediate priority. However, businesses that adopt a forward-thinking approach to AI today will better position themselves for their future. In this article, we explore three key benefits AI can offer SMBs in financial management, along with potential considerations during adoption.
Staying ahead of the curve
AI and Machine Learning (ML) tools are already proving invaluable for SMBs, providing opportunities for scaling and streamlining operations. By automating time-consuming administrative tasks, these tools free up business owners to focus on what matters most: their customers. Despite these advantages, AI adoption among UK SMBs remains low, with only 11% currently investing in AI and ML solutions.
When we look at the past few years, and especially the aftermath of COVID-19, we saw small businesses increasingly turn to credit cards. The cost of interest on credit cards was high, and if repayment was not immediate then it led to rising balances. As inflation surged, interest rates on borrowing, such as overdrafts, followed suit, compounding their financial burden. The rapid increase in interest payments left many businesses struggling to allocate funds towards innovation and technological advancement.
However, for those SMBs that embraced digital tools, the ability to counter these burdens and instead gain beneficial impact has been significant, with more than half (58%) of SMBs stating that technology has helped enhance efficiency across their operations.
A gradual and strategic approach to AI adoption can help businesses build confidence in its capabilities. For example, AI can support cash flow management by automating invoice reminders and flagging overdue payments for immediate action. This allows SMBs to cut down on the 56.4 million hours wasted each year chasing late payments in the UK.
Implementing AI effectively
Many SMBs are already benefiting from AI in their daily operations without even realising it. From AI-driven search engine insights and automated customer service chatbots to predictive financial analytics, AI has been seamlessly integrated into many business tools.
One area where AI is making a transformative impact is embedded financial management solutions. These systems incorporate AI-powered analytics, automation, and decision-making tools directly into business workflows. They enable SMBs to gain real-time financial insights, automate invoicing and expense tracking, and optimise cash flow. AI-driven forecasting also allows businesses to anticipate potential financial challenges and take proactive steps to safeguard profitability.
However, to fully capitalise on AI’s true capabilities, SMBs must move from passive use to strategic implementation, ensuring every AI investment serves a specific business goal rather than being treated as an afterthought.
Accountants: a vital resource for digital transformation
With 99% of UK accountants already utilising AI to support their clients, accounting firms are emerging as key advisors for SMBs navigating digitisation. For businesses lacking dedicated IT expertise, accountants can provide valuable guidance on where AI adoption will have the most meaningful impact.
For instance, AI-powered financial modelling can simulate various market scenarios, helping SMBs prepare for risks and refine their business strategies. AI also provides a clearer picture of cash flow by categorising allowable and disallowable expenses while pinpointing areas for cost savings.
SMBs should also consider consulting their accountants regarding financing. AI-enhanced financial management systems can help businesses present a more compelling case to lenders by improving their financial organisation and reducing perceived lending risks. Before refinancing, seeking expert advice can ensure SMBs secure the best options available, ultimately freeing up capital to invest in AI-driven growth.
By thinking beyond short-term survival and embracing AI’s potential, SMBs can build a more efficient, resilient, and competitive future.
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