Top Digital Tools for Small Business Finance Management
The UK digital finance tools market has grown rapidly in the last five years, giving small business owners more choice than ever. The right combination of tools can help you automate repetitive work, gain real-time visibility over cash flow, and make informed strategic decisions.
Let’s break them down with practical examples of how each can work in a real business.
1. Accounting & Bookkeeping Tools
Xero
- Best for: Businesses that want powerful reporting and integrations.
- Example: A small café uses Xero to integrate with its point-of-sale system, automatically recording sales each day. The owner checks weekly profitability reports without exporting data manually.
QuickBooks Online
- Best for: Businesses with multiple income streams.
- Example: An online craft shop selling on Etsy, Amazon, and its own Shopify site uses QuickBooks to import sales from each channel, making VAT reporting far simpler.
FreeAgent
- Best for: Freelancers and contractors.
- Example: A self-employed IT consultant uses FreeAgent to log expenses on the go, generate client invoices, and get tax estimates so there are no surprises at year-end.
The Balance app
- Best for: Small business owners and sole traders who want simple, stress-free accounting.
- Example: A café owner uses The Balance App to track daily sales, snap and store receipts, and get real-time cashflow insights – so they always know exactly how their business is performing.
2. Invoicing & Payment Processing Tools
Square
- Best for: Businesses that need both in-person and online payments.
- Example: A mobile dog groomer takes card payments on the spot with Square’s reader, and also sends online invoices to regular clients who prefer to pay later.
GoCardless
- Best for: Businesses offering subscriptions or retainers.
- Example: A social media manager sets up monthly direct debit payments for retainer clients, reducing late payment risk to almost zero.
PayPal Business
- Best for: Businesses selling internationally.
- Example: A digital illustrator takes orders from customers worldwide and uses PayPal to handle multi-currency payments with minimal hassle.
3. Expense Tracking Tools
Expensify
- Example: A tradesperson snaps photos of receipts immediately after buying materials. Expensify reads the merchant name, date, and total, and sends it to the accounting system automatically.
Dext (formerly Receipt Bank)
- Example: A wedding planner scans supplier invoices with Dext, which tags them to the correct project and syncs them to Xero for expense allocation.
4. Payroll Management Tools
BrightPay
- Example: A small recruitment agency uses BrightPay to handle weekly payroll for 15 employees, including auto-enrolment pension deductions.
Xero Payroll
- Example: A consultancy with three staff runs monthly payroll within Xero, so salary payments, PAYE submissions, and pension contributions all happen in one place.
5. Budgeting & Forecasting Tools
Futrli
- Example: A bakery uses Futrli to forecast seasonal demand, helping them plan ingredient orders and staffing schedules for busy months.
Float
- Example: A photographer uses Float to predict when payments will land based on invoice due dates, allowing them to plan marketing spend and equipment purchases.
Tip: When choosing tools, look for HMRC-recognised software if you’re VAT-registered or filing digitally under Making Tax Digital. You can check HMRC’s official list here: Making Tax Digital Compatible Software.
Tips for Successfully Implementing Digital Tools
1. Start Small, Scale Gradually
Jumping into multiple new systems at once can overwhelm you and your team. For example if you’re currently doing everything manually, begin with an invoicing tool to speed up payments. Once that’s running smoothly, add expense tracking, then payroll.
2. Customise Your Setup
Most tools allow custom categories, tax settings, and templates – make use of them.
Example: A personal trainer customises expense categories in Xero to match “Equipment,” “Venue Hire,” and “Marketing,” so reports show exactly where money is going.
3. Integrate Systems Wherever Possible
Choose tools that “talk” to each other to avoid re-entering the same data.
Example: An e-commerce store integrates Shopify with QuickBooks Online, Stripe for payments, and Float for forecasting – meaning one sale updates across all platforms instantly.
4. Set Clear Processes
Digital tools are only as good as the habits around them. Decide who enters what data, how often it’s reviewed, and how exceptions are handled.
Example: A consultancy firm schedules 30 minutes every Friday to review expenses, reconcile bank feeds, and chase overdue invoices.
5. Invest in Training
Many small business owners underuse their tools because they don’t fully understand them.
Example: Spending two hours on a QuickBooks training webinar can save dozens of hours later by teaching you automation features you didn’t know existed.
6. Use Automation to Save Time
Set up recurring invoices, automated reminders, and bank feed rules.
Example: A cleaning company sets recurring invoices for regular clients, freeing up the owner’s time for marketing instead of admin.
7. Monitor and Adjust
Review your setup every 6–12 months. Your business will evolve, and so will your needs.
Example: A self-employed videographer started with PayPal for payments but switched to GoCardless for lower transaction fees as their client base grew.
Key Takeaway:
Digital tools work best when they’re part of a planned workflow – not just a collection of subscriptions. The goal is to create a connected system that gives you clear, real-time financial visibility with minimal manual effort.
Common Mistakes to Avoid
- Choosing Based on Price Alone – The cheapest tool may lack essential features.
- Not Customising Settings – Tailor categories, reports, and templates to your needs.
- Failing to Integrate Systems – Disconnected tools can cause duplication of work.
- Ignoring Security – Always use strong passwords and two-factor authentication.
Example: A UK Sole Trader’s Digital Transformation
Background:
A self-employed graphic designer in Manchester was managing finances with Excel and paper invoices, spending up to 8 hours per week on admin.
Action Taken:
- Moved to FreeAgent for bookkeeping and invoicing.
- Linked bank feeds for automatic transaction imports.
- Started using Dext for receipt scanning.
Results:
- Admin time reduced to 2 hours per week.
- 95% of invoices paid on time thanks to automated reminders.
- Year-end tax return completed in under an hour.
Conclusion & Next Steps
Learning how to use digital tools to manage your small business finances can completely transform the way you run your business. With the right software, you can reduce admin time, improve accuracy, stay compliant with HMRC, and make better financial decisions.
The key steps are:
- Identify the areas where you need the most help.
- Choose reliable, easy-to-use tools that integrate well.
- Commit to regular use and updates.
Need expert help choosing or setting up your small business finances?
At Accounting Wise, we help UK small businesses adopt the right digital solutions to save time, cut costs, and grow sustainably.
Call us on 0330 113 8442 or visit a-wise.co.uk to book a free consultation today.
