Author

Dan Brightmore

Published

4 August 2026

Estimated Read time

4Mins

Graeme Donnelly, Founder & CEO of 1st Formations, on how small businesses can master cash flow and target growth

As British small businesses navigate a landscape of rising digital subscriptions and fluctuating utility costs, many are overlooking thousands of pounds in potential savings. While large corporations chase complex R&D credits, many limited companies are often leaving money on the table through sheer habit. 

In partnership with leading company formation agent, 1st Formations, we have identified 10 of the most effective, yet frequently ignored, financial hacks specifically tailored for UK SMEs. 

As Graeme Donnelly, founder and CEO of 1st Formations, puts it: “In 2026, operational efficiency is the new profitability. Many directors are so focused on top-line growth that they ignore the ‘silent drain’ of legacy bank fees, incorrect VAT categories, and dormant software subscriptions. Saving £200 a month through smarter digital choices is the equivalent of adding thousands to your annual turnover without the cost of acquisition. It’s about being as lean as you are ambitious.” 

1. The power of the ‘sector group’ 

Many directors believe the Federation of Small Businesses (FSB) or local Chambers of Commerce are only for established firms. In reality, the membership fee is often offset by the discounts they provide on business insurance, legal HR support, and software packages like Xero or Microsoft. 

2. The voluntary VAT advantage 

If your turnover is under the £90,000 threshold, you aren’t required to register for VAT, but doing so voluntarily allows you to reclaim VAT on everything from stock and web hosting to digital ads. While it does introduce an extra layer of administration, the ability to reclaim input VAT often far outweighs the effort involved. It also levels the playing field when pitching to larger corporate clients. 

3. Stress-test your small businesses VAT flat rate 

The VAT Flat Rate Scheme can significantly reduce your administrative burden, but many businesses are stuck in the wrong sector category. Reviewing your percentage, for instance 14.5% for IT consultancy vs. 7.5% for certain retail, could instantly boost your margins. 

4. Hunt for ‘hyper-local’ micro-grants 

While national grants get the headlines, local Growth Hubs and Local Enterprise Partnerships (LEPs) often have pots of £500–£5,000 earmarked for digital upgrades or energy efficiency. These are often poorly advertised but easier to secure than larger funds. 

5. Kill the manual spreadsheet 

Directors often miss out on tax deductions by forgetting small receipts. Using real-time scanning apps like Dext (for receipts), Pleo (for spending rules), or Expensify (for reimbursements) ensures every deductible expense is captured. Connecting these directly to your bank feed via QuickBooks or Xero turns a year-end headache into a streamlined process and makes bookkeeping easier. 

6. Look beyond the “big four” banks for funding 

Traditional loans are increasingly difficult for micro-companies to secure. Modern alternatives like Tide’s Funding Options, Uncapped (for revenue-based growth), or invoice finance platforms like Kriya offer the flexibility SMEs actually need without the long-term fixed commitments many traditional loans carry. 

7. Ditch the merchant account legacy 

If you’re still paying monthly rental fees for a card machine, you’re overpaying. Switching to fintech providers, such as Square, Zettle, or SumUp, eliminates fixed monthly costs and integrates sales data directly with your bookkeeping. 

8. Master the ‘work from home’ deduction 

If you run your limited company from home, you can charge relevant costs back to the business. These are essential business costs, such as a portion of your broadband bills, mobile phone contracts, and mileage or petrol costs. 

Whether using the flat-rate method (£6/week) or a formal rental agreement to claim a portion of mortgage interest and utilities, ensure you are documenting this correctly to stay HMRC-compliant. 

9. The quarterly subscription audit 

The ‘SaaS drain’ is real. Using tools like Cledara to flag duplicate project management tools or unused licences can shave hundreds off your monthly outgoings. To ensure this doesn’t slip through the cracks, set a recurring calendar reminder to audit your tools every quarter. Always negotiate at renewal; most providers have “retention rates” they don’t advertise.  

10. Stop paying for basic banking 

Many small firms are still paying monthly fees for basic banking, something digital-first providers have all but eliminated. Digital-first banks, such as Starling or Monzo Business, offer fee-free banking with superior app integration, saving both money and administrative hours. 

Learn more at 1stformations.co.uk

  • Digital Payments
  • Digital Strategy
  • Fintech & Insurtech
  • Neobanking

Author

Dan Brightmore

Published

19 January 2026

Estimated Read time

5Mins

Michael Ault, Country Manager at integrated payments specialists myPOS, offers strategic advice for SMEs looking to scale through digital transformation and diversification

Scaling a small business is one of the most rewarding, yet complex journeys for any entrepreneur. While growth brings opportunities for greater reach, higher revenue, and stronger market presence, it also demands foresight, discipline, and the ability to manage risk strategically. Securely integrating new technology is the main obstacle for 47% of SME’s, even though 76% of these businesses intend to expand their IT investment. This underscores a key point of tension, as many businesses want to grow through digital transformation but struggle to do so securely and sustainably.

The business landscape continues to evolve with changing customer expectations, technology, and economic conditions. For UK SMEs, the key to long-term success lies in achieving growth but also in building resilience. Sustainable scaling comes down to three principles: embracing technology pragmatically, diversifying intelligently, and investing in people and partnerships that strengthen resilience.

Leveraging Digital Transformation

Digital transformation is the foundation of business growth, especially for small business. Cloud-based solutions, automation, and data analytics help to streamline operations, reduce inefficiencies, and create better customer experiences. However, transformation must be purposeful, not performative.

The smartest approach is to scale technology investment incrementally, integrating flexible, modular systems that evolve with business needs. This approach not only lowers risk but also helps ensure digital maturity evolve over time. When SMEs use modular, cloud-based technology, operations run more smoothly and changes can be effectively analysed. Ultimately, resilience is not built through one-time upgrades but through a culture of continuous digital evolution.

Diversifying Revenue Streams

Depending on a single product, service, or market leaves a business vulnerable to sudden changes in demand. Diversification, when guided by customer insight and data can turn volatility into opportunity. Expanding into online sales, introducing subscription models, or targeting fresh customer segments can make income streams much more stable and sustainable.

At myPOS, we know that even simple changes based on data, such as adding additional payment options or tapping into cross-border e-commerce, can help cash flow and protect against market shocks. The goal of technology is to mitigate specific challenges without adding layers of complexity.

Investing in Employee Development

Your people are pivotal to your ability to grow as a business; empowered teams are the engine of sustainable scale. A team that feels supported and motivated will bring fresh ideas, adapt to challenges, and push the business forward. Investing in training, mentoring, and development opportunities builds skills that pay back in the form of innovation and improved performance.

In fast-changing industries, having employees who are confident in learning and adapting can make the difference between struggling through disruption and taking advantage of it. Equally, strong partnerships extend this resilience beyond the organisation. Building resilience at the team level creates resilience for the whole business, so fostering a culture of continuous learning and celebrating employee contributions is key to maintaining motivation.

Focusing on Financial Health and Flexibility

Financial resilience underpins sustainable growth. Scaling often requires upfront investment, and without healthy cash flow or reserves, opportunities can be lost. Monitoring income and expenses closely, cutting unnecessary costs, and preparing for seasonal fluctuations gives businesses more control.

Having flexible financing options, like credit lines, small business loans, or even crowdfunding, provides a level of agility. Instead of being caught off guard by unexpected challenges, businesses with financial flexibility are positioned to respond quickly and strategically.

Financial management software can make it easier to track performance, spot issues early, and forecast future needs. When you can see your finances in real time, you can make proactive, data-driven decisions instead of waiting for problems to happen. In markets that change quickly, this kind of financial management helps small firms plan with confidence, stay flexible, and establish a stronger base for long-term growth.

Prioritising Customer Relationships and Feedback

Your customers are not just buyers; they are advocates, sources of insight, and the foundation of repeat business and brand loyalty. Businesses that scale successfully often place customer relationships at the heart of their strategy by actively gathering feedback, responding quickly to issues, and personalising interactions, which shows customers they are valued.

This loyalty becomes a form of resilience. In periods of uncertainty, a base of satisfied, returning customers provides more stability than constantly chasing new ones. Successful businesses use CRM tools to track customer preferences and automate follow-ups so no opportunity to strengthen a relationship is missed.

Building Strategic Partnerships

Partnerships can accelerate growth while also spreading risk. Working with other businesses, organisations, or influencers can provide access to new audiences, shared expertise, or additional resources. Collaboration can also create opportunities for joint marketing, co-branded initiatives, or innovative product and service offerings.

In times of uncertainty, strong partnerships act as a support network. By aligning with others who share your values and vision, you create opportunities that are mutually beneficial and more resilient than going it alone. It is important to find partners whose goals and audiences complement your own for the best long-term impact.

The next stage of small business success will be defined by resilience rather than speed, the ability to adapt, recover, and continue to create value in the fact of uncertainty. For SMEs, this means developing adaptable growth plans that include flexible technology, diverse models and empowered employees.

Learn more at mypos.com

  • Data & AI
  • Digital Payments
  • Digital Strategy
  • Fintech & Insurtech

Author

Adam Edwards

Published

23 September 2024

Estimated Read time

5Mins

Adam Edwards, Product and Growth Director at Satago on how embedded finance is helping drive digitisation for the B2B financial space

Small and Medium Enterprises (SMEs) are at the heart of the UK economy. They contribute significantly to local employment and revenue across a wide array of sectors. However, the current economic landscape and consistently high inflation are inhibiting them from reaching their full potential.  

Three key challenges which prevent SMEs from investing in growth are tight cash flow, poor access to capital and the late payments crisis. With over £32 billion in late payments plaguing them, SMEs need longer-term, meaningful policy action from the government, alongside better Working Capital solutions. 

Investing in Embedded Finance

With a growing SME market needing better support than ever from lenders, banks are rapidly investing in IT adoption. Particularly, Embedded Finance tools, to better serve this sector. Indeed, analysts have forecast a staggering 148% growth in the Embedded Finance market. It is predicted to reach a revenue of $228 billion by 2028.  

Banks have been quick to offer flexibility to consumers in the business-to-consumer (B2C) Embedded Finance space. Offering lots of options for flexible finance in response to high demand. However, the business-to-business (B2B) market has in many ways been slower.  

There are certainly challenges here – but the opportunities are huge for the lenders that get this right to go on and serve the SME space. So, what can the B2B space learn from how Embedded Finance has succeeded in the B2C sector? And what are some of the benefits and new challenges that this investment could pose?  

The role of Embedded Finance in supporting SMEs and founders 

Embedded Finance emerges as an innovative approach to bolster SME support. It integrates financial services directly into non-financial platforms. This integration empowers SMEs to seamlessly access critical financial services. These include instant credit, streamlined payments processing, and optimised cash flow management. This enhances operational efficiency and financial resilience. 

When we look at B2C financial services, we can see traditional banks working hard to catch up with challenger banks. These competitors have presented consumers with entirely new means to access digital banking, improve their visibility on financial information, and manage their funds and savings with secure API access.  

This has forced traditional banks to digitise quickly in the B2C space to remain competitive and keep up with customer expectations. Embedded tools have become a key part of this. While the B2B financial services industry hasn’t traditionally faced the same level of market pressure to innovate – this is now starting to change. We will start to see the impact in a couple of ways.  

I predict we will begin to see rapid growth in the number of partnerships between FinTech companies and B2B lenders. Where banks such as Barclays have already been partnering with the likes of Amazon on the consumer side for a long time to offer flexible payment capabilities, we will see a lot more similar partnerships starting to take place in the B2B space, to support the growing SME market. As a result, I anticipate a rise in the number of online marketplaces dedicated to the B2B lending space. We will also see increasingly niche market areas – such as agriculture and dedicated equipment manufacturers, for example.  

The opportunities and challenges with Embedded Finance

There are several opportunities to be capitalised on via Embedded Finance in the B2B space. Lenders that have been held back by legacy systems in the past will now be able to offer a more flexible suite of digital finance options to customers, especially SMEs. SMEs, which may be run by a single founder or a small group of stakeholders, are likely to be used to an agile structure. They can take big decisions quickly and will be keen to be able to flexibly access financial tools. Through integration with expert providers, lenders can also benefit from new origination channels and access new pools of customers for bank accounts, financial consultancy and more.  

For the fintech partners and integrators, including those providing white-labelled products to banks, there’s a chance to take advantage of the trust customers have in their banking providers. And the lenders’ brand reputations can increase their own revenue and future opportunities for sale.  

Meanwhile, SMEs are set to reap the benefits of being able to offer better user and payment experiences to their own customers further up chain. They too, will benefit from better cash flow management, improved financial visibility and increased flexibility via different working capital tools. Just like consumers are able to – all of which will be facilitated by better digital tools.  

However, it is worth acknowledging that as the B2B space grows, heightened concerns around fraud risk associated with financial transactions are also likely to emerge. Going forwards, we’ll see more analytics and artificial intelligence built into Embedded Finance. This will feed into underwriting models and support fraud checks. With more complex transactions and shared financial data via Embedded Finance partnerships, the risks of non-compliance could become more perilous. Therefore, there are certainly challenges ahead.   

A competition for innovation in the B2B space 

For SMEs to thrive, sustained and reliable access to cash flow is essential. Collaborative efforts between the government and the financial services industry are critical. Establishing robust regulatory frameworks and fostering innovation in Working Capital solutions will be vital. 

The Embedded Finance market in over the next year and beyond can expect to see significant emphasis on B2B players, such as banks and corporate lenders. They are looking to catch up with the consumer market and serve SME customers with the most secure – and flexible – lending options.   

Consumers have realised the benefits of seamless, digital financial services for themselves. We’ll now see demand growing as SMEs expect the same innovation and experience when it comes to their B2B financing. Lenders and banks that want to satisfy this growing pool of customers hungry for flexibility and sustainable lending support, will need to be willing to evolve and digitise, or risk missing out on the competition.   

Satago is a leading fintech that enables lenders and corporates to streamline operations, boost revenue, and enhance their business customer experiences. This is achieved through cloud-native Working Capital and Cash Flow solutions, powered by real-time data, Open Banking, and API technology. 

  • Embedded Finance