UK SMBs losing as much as £1.1bn per month from poor expense tracking

• Dext research highlights broken expense systems trapping SMBs in cycle of financial waste and stunted growth
• 61% of accountants state their SME clients are blindsided by expenses, leading to cash flow issues
• The top new year’s resolution for over half of SMB leaders is stronger financial control
• In the lead up to Christmas, 69% of SMB leaders claim untracked, misreported or delayed expenses results in limited visibility of outstanding liabilities

According to new research from Dext, the leading bookkeeping automation platform provider, the UK’s small and medium-sized businesses (SMBs) surveyed could be losing a staggering average of £742 every month from incorrect invoicing stemming from poor tracking of rechargeable expenses. With the UK home to over 5.5mn SMBs, the figures indicate up to a £1.1bn monthly shortfall in the economy, signalling the need for a massive overhaul of outdated expense management practices. 

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 £1.9bn 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 £1.1bn 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 worth up to £1.4bn. 

These inefficiencies were also found to hold severe long-term implications with over two-thirds (68.6%) of SMBs stating expense mismanagement had an impact on their growth initiatives with employee (32%), supplier (29%) and client (23%) relationships most impacted. As more than half (51%) of SMB entrepreneurs expect 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, accountants spend on average five hours per month fixing client reporting errors relating to expenses and supplier statements and over 3 in 5 (61%) mention SMEs are blindsided by expenses, which lead to cashflow 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 in the UK, 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 must embrace digital tools and get smarter about their expenses, especially in the face of rising rates and tighter tax controls. For accountants, this represents both a challenge and an opportunity to guide small businesses in modernising their systems, ensuring accurate reporting and avoiding cash flow pitfalls. By leveraging digital solutions, SMBs can not only streamline financial processes, but also position themselves as reliable partners in the wider economic landscape, supporting growth and stability in 2025.”

The research was conducted by Censuswide, among a sample of 500 SME leaders and 100 Accountants/Bookkeepers (aged 18+) across the UK. The data was collected between 22.11.2024 - 27.11.2024. Censuswide abides by and employs members of the Market Research Society and follows the MRS code of conduct and ESOMAR principles. Censuswide is also a member of the British Polling Council.