Last updated: 19 May 2025 08:30 Posted in: AIA
We consider how accountants can help their SME clients to navigate their finances and prepare for growth.
Growth has been the central pillar of the UK government’s mission since taking office in July 2024. Funding and investing in public services and raising living standards is underpinned by the growth of UK plc. However, finding effective ways of building and fostering an environment that encourages and stimulates this growth appears to be a more difficult challenge to grapple with.
Increased government borrowing costs and the stock market turbulence indicate a challenging economic outlook ahead. Business confidence since last year’s Autumn Budget has taken a hit and retail sales figures indicate that consumer confidence is wavering too. Weighing up these factors, the Office for Budget Responsibility downgraded its UK growth forecast ahead of the Chancellor’s recent Spring Statement, bringing it more into line with forecasts from the likes of Goldman Sachs, which anticipates 1.2% growth.
For UK plc to thrive, we need growth and optimism from both corporate businesses and SMEs. Corporate Britain is made up of tens of thousands of large enterprises, whereas the vast majority of the 5.5 million SMEs are sole traders or micro businesses employing fewer than four people. These are two extremes in terms of size and scale. However, there is another segment of the SME community – the medium-sized ‘established businesses’ – which employs five to 250 people.
There are a few hundred thousand of these established businesses in the UK, representing barely a tenth of the SMEs. Yet they are disproportionately important to our economy, society and local communities, making up a third of UK employment and GDP. These businesses are complex and can struggle with investment, red tape and regulation. They are also often overlooked and underserved, notably by traditional banks.
For accountants, these medium-sized businesses are often their most valued clients. Accountants relish taking a broader advisory role, supporting them with forecasts and scenario planning, and aiding their decision making. They will help their clients to prepare for affordability discussions with banks or investors, and avoid the sleepless nights caused by cashflow and payroll concerns. Supporting these businesses and helping them through the macro-economic and operational challenges ahead will determine the health of the UK’s economy. And this is where accountants play a crucial role.
The state of the established SME nation
To gauge the pulse of the UK’s established SMEs, we recently partnered with the Great British Entrepreneur Awards to survey more than 450 business owners. These businesses were from all four nations in the UK and at various stages of growth and across all industries, including retail, hospitality, construction, manufacturing and healthcare. The survey revealed that 72% of business owners believe that business has become more difficult over the last year, while 42% say economic uncertainty is weighing on their business and decision making.
Despite these concerns, 40% of business owners are looking to raise investment in the next 12 months; and encouragingly, 76% of respondents are aiming for profitable growth over the next 18 months. 48% are also looking to achieve greater operational efficiencies with advances in technology and automation, helping them to streamline their costs and drive towards improving profitability.
The key for established SMEs in 2025 will be balancing caution with drive and ambition. Helping businesses to understand their options and guiding them towards their goals is where their accountants, as trusted advisors, have a huge role to play.
The outlook from accountants
Alongside business owners, we recently undertook a national survey of more than 70 accountancy firms. Many in the accountancy industry also have concerns about the business environment, with 89% of respondents believing the policies announced in the Autumn Budget will make business harder. In terms of measures that the government could take to make business easier, 68% of accountants suggested streamlining communication with HMRC and 40% would like to see the regulatory burden reduced.
We asked the accountants how often their clients ask for business support and advice. 42% reported having these discussions on a monthly basis, while 16% said it was quarterly. Encouragingly, 36% said it was a daily occurrence.
Fuelling growth often requires access to finance and investment. When asked what banking needs their clients discuss, 55% of accountants said working capital, 52% said current accounts and 39% said long-term borrowing. However, 45% of accountants said that SMEs are not receiving the necessary support needed from banks, while 50% think there is some support available, but that more is needed. So, how do accountants help to bridge these discussions and help their clients to navigate their finances and prepare for growth?
In practical terms, it could mean keeping banking under review with clients. This includes helping them to assess the financial products they have and their day-to-day money management, including working capital and savings.
Our own research reveals that many high street banks focus their business banking benefits and experience on catering for big corporate clients. An example of this is that established SMEs, and SMEs generally, are offered less favourable interest rates on their savings. We calculated that businesses with an average balance of £75,000 are losing out on up to £2,268 per annum. Nationally, this could mean that up to £9 billion is owed to SMEs but instead is being lost. This vital cash could be used to mitigate some of the risks that established SMEs see on the horizon, including the increased cost of employment. Or it could support investing in software to reap efficiency gains or boost their sales and revenue growth.
Accountants can also lead by example and implement best practice in their own business. This can include deepening relationships with business banks, ensuring that they are receiving value such as cashback on their spending, securing the best savings rates and looking for no fees banking options. Many accountancy firms themselves are established SMEs. By developing a deeper understanding of their own business financing needs and options for short-term financial health and long-term growth, accountants can speak from a level of experience and confidence when helping their clients.
As it stands, these banking conversations often only come about when clients ask for help. We recently teamed up with ICAEW to poll 170 accountants on this. We found that only 8% of accountants regularly and proactively discuss business banking with their clients. On the other hand, nearly half of those polled (46%) said they don’t have these conversations with clients at all and they don’t feel confident doing so. This demonstrates a huge opportunity for accountants to deepen their discussions and relationships with clients, helping established SMEs keen to grow but unsure how to do so in the current climate.
However, the banking sector has a role to play here, in terms of empowering accountants with better data and information, and equipping them with the knowledge and tools they need to have these conversations. So, how can today’s banks provide this level of personalised support to accountants?
The return of relationship banking
Historically, all businesses, regardless of their size, would have had a relationship manager in their local branch, supporting them with banking and broader business needs. While the demand for this level of customer support is still there, many high street banks have withdrawn from serving established SMEs and retrenched their relationship managers. This has left accountants to step into this gap and assume more of the business advisory role that they used to share with bank managers.
While relationship managers might seem a thing of the past, it’s not always the case. Allica Bank has built its offering around this more traditional and local approach to business banking – albeit in a modern world of online services and tech innovation.
Regular communications with a banking relationship manager can unlock huge value for established SMEs, from market insights to more personalised help. Alongside this, banks can bring other benefits, including data to help accountants identify clients within their portfolio that would benefit from financial solutions, helping to support businesses proactively, and providing quick decision making during lending applications or easy onboarding experiences.
While many of the high street banks have become increasingly difficult for established SMEs to work with, the banking landscape has changed. There are many challenger and specialist banks available now. So it is important to keep these under review and understand who might be best suited to support your clients’ industry, size or needs.
A good banking setup will help clients to access more competitive interest rates and unlock rewards such as cashback. Helping clients to earn more on their cash is a tangible way to add value, especially as rising taxes and inflation impact margins. If you know that your client has cash sitting within a current account earning low or zero interest, suggesting a move to another bank with higher interest return can make a huge difference. Similarly, reviewing banking fees and proactively suggesting alternatives with lower fees can reduce the operational cost for business clients.
Keeping conversations about banking consistent and regular with clients is key. Questions about your client’s banking needs and current experience should become a regular part of your monthly or quarterly reviews. Are clients tired of spending hours on the phone just to get through to a call centre? Would they like their cash to work harder? Are there any growth opportunities they would like to unlock in the coming year by refinancing an asset? Asking these questions will help you to understand the current challenges that your clients are facing and, crucially, to find potential solutions. These discussions will deepen your clients relationships and position you as their trusted advisor.
Another value add for accountants is to help clients with risk management. 2024 saw many stories about fraud and current accounts being frozen or debanked. Helping business clients to become multi-banked is prudent and will help to mitigate operational or banking access challenges they might face. Accountants can further support clients by keeping all key ‘Know Your Customer’ (KYC) information current and up to date. Having easy access to accurate business information can ease anti-money laundering and due diligence checks, whilst also aiding conversations about lending readiness.
There are plenty of opportunities to strengthen the support offered to clients beyond tax and compliance. In a world of challenging macroeconomic conditions and where established SMEs – despite the pivotal role they play in the economy – are often overlooked by high street banks, accountants have the potential to become key business advisors for their clients. And while the presence of the high street banks might be disappearing, the banking landscape has evolved and innovated in recent years.
There are many challenger and specialist banks out there who have the solutions, resources and expertise to support accountants and their clients with competitive business banking. These providers meet their optimism and enable established SMEs to reach their potential and growth plans in 2025 and beyond.
Allica Bank partners with organisations who are passionate about supporting and serving UK SMEs, with a particular focus on partnering with accountancy firms.
Author bio
Sophie Hossack is Head of Partnerships at Allica Bank, with a particular focus on partnering with accountancy firms.