Micro businesses trying to squeeze financial management into 3.6 hours a month

Britain’s 5.3 million sole traders and micro businesses estimate they’re spending the equivalent of 2.5 million working days collectively each month on managing their finances, according to a new report.

The study among sole traders and owners of businesses with less than ten employees, commissioned by KashFlow, aimed to get a better understanding of the pressures they feel when it comes to things like balancing their books, managing cashflow and doing their annual tax return. The study uncovered some surprising findings. Despite almost a third (32%) admitting that managing their finances leaves them feeling stressed, only 6% rated their finance management abilities as ‘not good’ – with 87% rating themselves either ‘really good’ or ‘not bad’ at doing things like keeping on top of cashflow, managing payments and staying compliant.

As part of the study, KashFlow considered the list of jobs that are part of financial management for sole traders and micro businesses, all of which they say they’re currently fitting into less than half a day a month. These include:

  • Creating and issuing invoices to customers
  • Chasing late payments
  • Recording all income and expenditure
  • Reviewing corporation tax liability to ensure money is put aside
  • Reviewing payments to owners and directors (including shareholders)
  • Paying staff salaries
  • Paying suppliers (including rent) and ensuring they’re not paid twice
  • Managing expenses (paying staff and ensuring expenses are billed to customers)
  • Managing staff pensions
  • Reviewing prices against competitors to ensure the company is competitive
  • Costing new jobs and creating quotes (or prices and estimates) based on time it will take to do the job and/or supplier costs
  • Profit forecasting – Ensuring that the company will make a profit in the short and long term and making adjustments to the business where there is a discrepancy
  • Cashflow forecasting – Ensuring that the company can pay invoices when they full due
  • Reviewing investment for growth opportunities and calculating the opportunities and risks
  • Regularly reviewing supplier costs to ensure value for money
  • Reviewing capital investment needs and funding

Oliver Shaw, CEO of KashFlow, said: “It’s really encouraging to see that many of those we surveyed feel confident and in control when it comes to their business finances, especially as we know it’s not their favourite thing to do. However, the figures suggest that many could be underestimating how long they actually spend each month, or perhaps overlooking important finance management tasks which will help them stay in better control of their business in the long term.

“Sole traders and micro businesses make a huge contribution to our economy, and our research shows they’re a really passionate and motivated group, who love being their own boss. Staying on top of their finances is vital for them to be compliant and ultimately, stay afloat, so they should consider tools that allow them to do it in a smarter and more efficient way.”


SME Publications/ SME XPO 2024