Why UK small businesses are missing critical financial insights

Small businesses are missing out on key financial insights that could help them manage cash flow and build sustainable growth, a new study has found.

The latest research from Enterprise Nation – which looked at AI adoption, open banking and cyber security readiness – reveals concerning gaps in technology uptake among UK founders – with just 12% saying they use cash flow forecasting tools.

The survey of more than 1,000 small businesses found that while AI adoption is high at 79%, implementation rates vary significantly across different sectors and business stages.

Early-stage businesses are spending £2,800 every year on AI technology – but firms over 10 years old lean towards light-touch pilot schemes.

Aaron Asadi, CEO of Enterprise Nation, said:

"This compelling snapshot demonstrates a clear lack of awareness around some of the emerging technology available to small businesses like open banking. And yet these are the tools that are going to make a real difference to profitability and growth.

"Raising awareness and bundling that up with targeted support is going to be crucial to help them navigate the complexities of open banking, AI adoption and cyber resilience."

More than a third of firms are using AI to reduce costs (36%), boost product innovation (36%) and scale without hiring (30%).

While 62% report an improvement in operational efficiency, there are still real concerns around lack of internal expertise (43%), ethics and compliance (28%), upfront costs (26%) and data security (26%).

Are businesses cyber-secure?

The research also examined cyber security readiness among small businesses across all sectors and found only 13% reported they'd experienced a cyber incident in the past 12 months.

Among those affected, 69% experienced phishing attacks and 32% had their business email accounts compromised, with little or no financial loss or impact on trading.

While 43% said they allocate budget to cyber security, it's less than 1% of turnover. Meanwhile, 31% of businesses said they spend nothing at all.

Open banking

When asked about open banking, the majority of businesses surveyed admitted they had very limited awareness. On a scale of 0 to 5, small businesses reported an average familiarity score of 2.0, which is below the midpoint of 2.5.

Businesses in Yorkshire and the Humber (1.5) and East of England (1.7) reported the lowest familiarity. Unsurprisingly, tech firms are the most familiar with open banking (score 2.9), with those in the education sector scoring 1.6.

Despite this, the survey found that the biggest financial pain points were volatile cash flow (48%), access to credit (16%) and slow invoicing processes (13%).

Read more insights on our small business insights page