The business world is always changing, and the speed at which change is happening is becoming much faster. Costs can shift month to month, consumer and customer behavioursevolve, and external factors like supply chain delays and economic pressures are more impactful now than ever.
These changes do not mean it is getting harder, but it does mean traditional methods are becoming stretched. At the same time, Artificial Intelligence is advancing rapidly, and the combination of business and AI is reshaping financial decision-making, especially for small and medium-sized businesses that need clarity and control.
For many SMEs, the aim isn’t to become more high-tech, it’s much simpler than that –stability. Getting paid on time, cutting admin and having predictable cash flow. In today’smarket, those needs are getting harder to meet using reactive tools. This is why AI is starting to matter beyond basic automation.
What SMEs actually care about
Despite technological changes, SME’s priorities have always been consistent. Business owners crave tools that solve real-life, day-to-day problems, that do not need extra time and effort to interpret.
– Getting paid faster with less need for chasing
– Know what cash flow may look like in 2, 4 or 12 weeks
– Less admin for business owners so they can focus on growing
– Financing opportunities that are available at the right time
Late and delayed payments remain one of the largest barriers to stability. Researchsummarising Federation of Small Businesses findings highlights the issues of late payment: 37% of firms experience cash flow difficulties due to late payments, at least 30% are forced to use an overdraft, and 35% spend an average of 1.2 whole days per month chasing late payments. (Source: UK Government research on the impact of late payments on the UK economy)
The uncertainty and time restraints involved with late payments impact SMEs more than is visible. Chasing payments diverts attention from growth. Relying on overdrafts reduces flexibility. And not knowing when money will land makes planning risky rather than strategic.
AI is becoming more than automation and is the future of easing those difficulties for SMEs.
For many SMEs, digital finance has only meant automation – generating reports, sending invoices and categorising business expenses. While this is helpful, it can also bring a limited perception of the business’s finances. AI can change the game with it’s ability to predict, recommend and provide greater insight to support growth plans, not just record data.
AI is able to:
• forecast cash flow using live accounting, terminal transaction and banking data
• spot patterns in payment behaviour (by customer, season, product, or channel)
• create predictions based on theoretical changes with pricing, staffing and supplier delays
• identify risks to payments and cash flow delays early, before they become urgent
A practical example of how predictive technologies are being produced comes from the finance and analytics space, where AI-powered predictive analytics are reshaping cash flow forecasting for SMEs. AI can analyse large amounts of previous and real-time financial data, detect patterns and trends, and generate forward-looking insights that help businesses anticipate both risks and opportunities before they occur. These systems continuously adjust forecasts as new data arrives, including seasonal trends and customer behaviours, which means businesses aren’t reacting to cash flow issues, but planning around them.
https://www.phoenixstrategy.group/blog/how-ai-predictive-analytics-improves-cash-flow-forecasting
AI can remove ‘timing risk’ from SME finances
When SMEs talk about cash flow stress, the issue often comes down to timing risk. The constant mental load of questions like
‘Will they pay me on time?’
‘Will incomings be enough to cover outgoings?’
’Will hiring temp staff for the busy season stretch current costings?’
This uncertainty can become exhausting for those in the SME space, and lead to conservative growth decisions.
One of the more powerful promises of AI is the continuous assessment of cash flow. Instead of updating monthly or quarterly, AI systems can access cash flow dynamically based on live transactions as the business operates day-to-day.
This enables:
• Financing opportunities to be optimised at the right time, based on real performance
• Smarter limits and affordability decisions with less guesswork for the business owner
• Payment options tailored to the business’s actual trading patterns
• Reduced admin that can impact and delay decision-making
The use of AI within this framework shifts the process from reactive to proactive, with business owners no longer being forced to act under pressure.
The UK has been tightening its focus on payment practices, including the move to the Fair Payment Code (launched December 2024) – but SMEs still need tools that help them operate in the reality they face today.
Using AI and smarter systems = the future of simpler payment solutions for SMEs. Payments won’t only be ‘faster’ but they will be smarter and more connected:
– payments, forecasting, funding and external insights will work together
– less manual effort with chasing payments
– more confidence in the growth plan to hire and invest due to the visibility of predicted future cash flow
AI isn’t about replacing human judgement. It’s about supporting it, reducing uncertainty, removing timing risks, and giving Small and medium-sized businesses the financial clarity they need to operate confidently in a fast-moving world.
