UK micro-businesses spend 10 weeks of the year working on financial admin, according to a new report from digital bank Starling.
The report, Make Business Simple, shines a light on the practices of the UK’s 5.6 million micro-firms, which make up 96% of the business population, and encourage them to embrace new ways of cutting down time spent on financial admin.
By studying more than 1,000 UK micro-businesses, Starling found that the average firm clocks up 79 hours of labour each week, of which 15 are spent on finance admin tasks – a considerable 19% of total time, equating to just under 10 weeks of the working year. The research also found that the smallest firms are disproportionately impacted by this kind of work, with sole traders spending almost a third (31%) of their labour time on financial admin work, and companies with one to four employees devoting a quarter (25%) of their time to this area.
Micro-businesses in the study recognised this as an issue, with more than quarter (27%) stating that they spend too much time on financial admin, rising to almost half (46%) among firms with 5-9 workers. When asked what effect is has on the rest of the business, one in 10 (10%) believed it hampers growth while a fifth of micro-firms (21%) say that if they could reduce time spent on finances, they would divert the labour towards sales.
The most time-consuming finance task is accounting, which takes micro-firms 1.7 hours each week, equating to more than one week a year spent solely on keeping the books. Accounting was also seen as the most stressful part of running a business and was more likely than any other task to eat into downtime, with a third (32%) of micro-firm leaders stating this is the case.
When asked what could save time in this department, one in five (19%) firms felt that being able to see and access all of their finances in one place could be the solution, while one in six (16%) recognised the potential benefit of having an accounting system integrated with their bank account.