How financial software offers a lifeline to small businesses

As many small businesses struggle to keep on top of regulatory changes, there is an opportunity for B2B financial software providers to bridge the gap

Complying with legal and regulatory obligations is a significant undertaking for any business – but particularly smaller businesses, who lack resources and often struggle to remain abreast of changes in the rules. Increasingly, financial software solutions aimed at SMEs combine convenient functionality with a finger-on-the-pulse approach to regulatory requirements.

It all begins with understanding what small business owners need, as Simon Kearsley, CEO of accounting software specialist bluQube, explains: “With hybrid and remote working now the norm for many small businesses, multi-device access from anywhere is a key requirement, so much so that it’s a feature that’s often taken for granted in B2B software. Similarly, functionality is expected as standard; the software needs to be intuitive and capable of carrying out the necessary functions and processes.

“However, software developers need to ensure that functionality is accessible and intuitive, enabling time-poor businesses to be able to understand and use the software straight away without having to rely on lengthy instructions or manuals for guidance.”

What do small businesses want from financial software?

Nicolas Vrillaud, Head of Partnerships for Mettle, the digital business account from NatWest, adds: “There are a few common challenges small businesses tell us they face, and it’s important to understand them to know what they are looking for in B2B software. Generally, they are time-poor, they worry about getting the financial admin – especially tax – and cash flow right.

“So, when we look at how small businesses pick B2B software, there are a few things we need to take into consideration. For starters, we need to know if it will save them time on a day-to-day basis and if it will be difficult for them to set up or if the software is simply ready to go. Because a lot of small businesses might not have used this software before, having it recommended to them by someone they trust, like their accountant, means it’s most probably fit for purpose. And, finally, we have to consider if the software is a necessary expense for them, particularly in the current economic environment.”

Vrillaud points out that small businesses have different needs from larger ones, comparing it to bank accounts: “Small business owners have very similar expectations to retail banking customers – they want software that is largely self-serve, quick and easy to use, and increasingly mobile-first.” This explains why a high number of challenger banks, taking advantage of the opportunity to appeal to SMEs, are launching bookkeeping features like invoicing, transaction categorisation and receipt capture, he says.

“Large corporations, on the other hand, will most likely want software that can be made bespoke to their needs, integrated within their existing software stack, and with stringent access control to allow for the various functions within their finance organisation to perform their specific duties.”

Can small businesses be fully reliant on B2B software?

As small businesses increasingly lean on B2B software to keep them informed of regulatory changes, do they risk becoming complacent? Although many platforms are good at informing clients about upcoming changes and how they’re likely to affect their business, it’s no substitute for actually having a thorough understanding of the regulatory environment.

“As competition heats up between incumbents and new entrants, an option to differentiate propositions is to provide regulatory updates, nudges and educational content to customers,” Mettle’s Nicolas Vrillaud says. “This is something that is increasingly happening in the small business market. There’s actually a deep fear of non-compliance that still needs to be addressed. This will lead to the emergence of ‘compliance as a service’ as a broader software category that encompasses, but is not limited to, financial management.”

BluQube’s Simon Kearsley continues: “Naturally, small businesses are more price sensitive when it comes to selecting software, but the main difference between small and large is the supporting role the financial software plays within the organisation. Small businesses often see financial software as a compliance issue, relying on it to generate accounts and share data in accordance with regulation. Larger organisations with dedicated finance teams and a more comprehensive understanding of the basic systems and processes use it for performance insights and strategic overview, and as more of a decision support mechanism.

“While we develop financial software and have a responsibility to keep track of the underlying legislation changes to make sure they’re reflected accurately in the software, we have to tread carefully in the way we support business owners. With the finance industry being so heavily regulated, we cannot fulfil an advisory role for our clients and must be careful to only refer to the government guidance issued. Where this becomes challenging is in the timescales between the initial announcement and the changes coming into force, as we need time to build the changes into our software. We work closely with the industry body, the Business Application Software Developers Association (BASDA), to understand changes to regulation ahead of their implementation to ensure we can get the rollout completed in time.”

A prime example, in the UK at least, is Making Tax Digital (MTD) – a government initiative aimed at improving the tax system via the introduction of digital channels. Nicolas Vrillaud says that financial software firms positioned themselves as infrastructure providers during this time, providing the engine for MTD submissions, for example, rather than explicitly offering advice on compliance.

What future functionality will we see from B2B software?

Kearsley believes that there are several areas where B2B financial software providers should be focusing their attention: “Usability and intuitiveness will continue to be a huge focus for B2B financial software. With customer expectations increasing all the time, users have short attention spans and will become frustrated with, or even write off, an application they can’t make sense of almost immediately.

“Alongside interoperability, AI will also start to play more of a role. As software developers, we’re used to the customer demanding what they want from the software, but AI can help software become more helpful and proactive to customers. Although it’ll take time to get there, in future we’re likely to see systems asking users questions, highlighting issues and areas that require attention and suggesting next actions.”


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