The newly-released data, which compiled survey responses from over 500 UK SMB leaders as well as 100 accountants and bookkeepers, revealed inadequate client invoicing and expense management systems are leaving SMBs without access to real-time, accurate financial information. This deficiency affects businesses’ ability to meet payment deadlines, with late payments from clients due to poor expense tracking costing SMBs up to an estimated £1.9 billion a month. These delays in payment create a ripple effect, challenging cash flow for SMBS and their suppliers. The incorrect tracking of rechargeable expenses, such as travel and supplies, is further exacerbating the issue, costing the UK’s SMB community up to £1.1 billion per month.

With 69% of SMB leaders claiming untracked, misreported or delayed expenses results in limited visibility of their outstanding liabilities, the knock-on effect has been felt heavily by suppliers, who are dealing with delayed payments from SMBs worth up to £1.4 billion.

These inefficiencies were also found to hold severe long-term implications with two-thirds (68.6%) of SMBs stating expense mismanagement had an impact on their growth initiatives. With more than half (51%) of SMB entrepreneurs expecting more stress from an increase in employee expenses over the Christmas period, the situation is expected to be exacerbated as the year closes. Ahead of 2025, 53% of SMB owners have listed stronger financial control as their new year’s resolution.

According to Dext’s research, 48% of SMB owners have experienced financial trouble over the past year with respondents stating better cash flow visibility would have helped them to avoid these issues. The findings align with the UK government’s emphasis in recent weeks to address late payment issues for SMBs on a broader scale, primarily through its Fair Payment Code.

Overseen by the Small Business Commissioner, Liz Barclay, the code helps smaller firms identify reliable and trusted partners by introducing a gold, silver, and bronze system to reward best payment practices. Geared towards tackling late payments and lengthy payment terms that can lead to financial failure, the goal of the initiative is centred on boosting cash flow for small businesses which is central to their survival.

Speaking on the new findings, Sabby Gill, CEO at Dext: says: “With SMBs forming over 99.9% of total businesses, it’s clear that expense mismanagement is a challenge for the entire economy. As the data reveals, we’re in a vicious and costly cycle of delayed invoices, late payments, and strained relationships, which is impacting stakeholders across the board.

“No matter their size, industry, or service, businesses need to embrace digital tools and get smarter about their expenses, especially in the face of rising rates and tighter tax controls. Those SMBs that prioritise smarter financial practices now will be better positioned to drive growth, strengthen relationships, and contribute to a more resilient UK economy in 2025.”

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