British businesses can demonstrate higher levels of financial literacy than their European counterparts.
A survey by fintech SumUp, surveyed 2,000 independent European businesses comprising the UK, France, Italy and Germany.
It revealed higher levels of business confidence amongst British businesses than the other three countries.
According to the data, 48 per cent of British owners are completely confident in managing their business finances, compared to 30 per cent in Italy, 27 per cent in Germany and 21 per cent in France.
British owners were also more likely to manage their finances themselves with 51 per cent stating they handled their own accounts using paper record keeping, 23 per cent outsourced to an external party and 17 per cent used software.
This is compared to Germany where only 24 per cent of owners kept record of their own finances manually, with 38 per cent hiring an accountant or tax consultant and 33 per cent using software tools.
The survey revealed despite British owners managing their own finances, 76 per cent had never received any formal education or training in financial management.
According to the survey, British owners had the best knowledge of tax regulation and compliance with just 14 per cent finding it a challenge to understand tax rules, compared to 20 per cent in Germany, 19 per cent in Italy and 15 per cent in France.
However, managing cash flow and expenses emerged as the greatest challenge for British SMEs, with 16 per cent of owners finding it the most time consuming.
“The issue was only more pertinent amongst French businesses, highlighting that despite growing rates of financial literacy, rising costs are a continuing scourge for UK SMEs,” SumUp explained.
The survey revealed the impact of the ongoing cost of living crisis on British SMEs when looking at how it has affected retirement plans.
Some 28 per cent of business owners stated that complications caused by rising costs impacted their retirement with a quarter of business owners saying they had no intention of retiring.
Corin Camenisch, product marketing lead at SumUp, said: “The UK is home to most micro-enterprises in Europe - this has perhaps in turn helped the spread of knowledge between business owners, raising financial literacy rates.
“There are also 5.3mn family-owned businesses in the UK, which has potentially led to the passing down of financial knowledge through generations, as the entrepreneurs have learned to navigate the changing business landscape.
“Still grappling with the ongoing effects of the cost of living crisis, it’s more important than ever for SMEs to share their financial know-how and come together as a business community.”
alina.khan@ft.com
