Running a small business in the UK has never been more dynamic—or more demanding. From tracking expenses and managing payroll to staying compliant with HMRC, today’s business owners juggle a lot. Thankfully, cloud accounting tools have transformed how small businesses handle their finances.
As accountants supporting small businesses, we’ve seen first-hand how the right digital tools can save time, reduce errors, and improve decision-making. If you’re still using spreadsheets or a shoebox full of receipts, it’s time to upgrade. Here are five essential cloud accounting tools every small business should know about in 2025.
- Xero – Accounting Made Simple
Best for: General bookkeeping, invoicing, bank feeds, payroll
Why we love it: Xero is one of the most intuitive and powerful accounting platforms available, especially for small businesses. It connects directly to your bank account, tracks transactions in real-time, and allows you to generate quotes, invoices, and VAT returns in just a few clicks.
With Making Tax Digital (MTD) requirements expanding, Xero’s seamless HMRC integration helps businesses stay compliant without the usual stress. Plus, its real-time dashboards give business owners a clear picture of cash flow and financial health.
Bonus: It integrates with over 1,000 other apps—including the ones mentioned below.
- Dext (formerly Receipt Bank) – No More Lost Receipts
Best for: Receipt capture, expense management, data extraction
Why we love it: Dext saves hours of manual entry by extracting key information from receipts, bills, and bank statements. You (or your employees) can simply snap a photo of a receipt using the app. Dext automatically reads the supplier, amount, date, and tax—and sends it straight to your accounting software.
This tool is a game-changer for businesses with multiple expense claims or paper-heavy workflows. It also creates a digital audit trail, which is a blessing come tax time.
Perfect for: Businesses that travel frequently or process a lot of small expenses.
- GoCardless – Hassle-Free Direct Debit Payments
Best for: Collecting recurring payments, reducing late invoices
Why we love it: Cash flow is the lifeblood of any small business. GoCardless helps improve it by automating customer payments through Direct Debit. You no longer have to chase unpaid invoices or wait days for bank transfers.
GoCardless integrates with tools like Xero and QuickBooks, so payments are automatically reconciled in your accounts. It’s especially useful for businesses with subscription models or regular service contracts.
UK-friendly: It’s FCA-regulated and widely accepted by banks and businesses.
- Fathom – Financial Reporting and Forecasting
Best for: Management reporting, KPIs, business performance insights
Why we love it: Numbers mean little unless you understand what they’re telling you. Fathom turns your financial data into clear, visual reports—ideal for board meetings, funding applications, or just keeping your finger on the pulse.
You can track key metrics like gross margin, debt-to-equity ratio, and forecast cash flow with ease. If you’re a growing business looking to level up your strategic planning, Fathom is the way to go.
Added value: As your accountants, we can help set up and interpret reports so you get real insight, not just spreadsheets.
- HMRC MTD-Compatible Bridging Tools – Staying Compliant
Best for: VAT submissions if you still use spreadsheets
Why we include it: While platforms like Xero or QuickBooks are fully MTD-ready, some businesses still rely on Excel. Bridging tools act as a digital link between your spreadsheet and HMRC’s MTD systems.
These tools are vital if you want to remain compliant without moving everything to a new system right away. However, we recommend this as a short-term solution—moving to full cloud accounting brings bigger benefits in the long run.
Final Thoughts: The Power of a Connected System
Each of these tools is powerful on its own—but together, they create a seamless, automated accounting ecosystem. Imagine this:
- You snap a receipt on your phone (Dext)
- It’s posted to your accounts (Xero)
- The client pays by Direct Debit (GoCardless)
- You get a report showing this month’s KPIs (Fathom)
- And it’s all compliant with HMRC (MTD tools)
That’s what cloud accounting can do.
At Accnet Solutions, we help UK small businesses make sense of these tools—choosing, integrating, and supporting the ones that best suit your workflow and goals.
Need help going digital?
If you’re ready to embrace cloud accounting but aren’t sure where to start, we’re here to help. From setup and training to ongoing support, we make cloud accounting easy and effective.
📞 Get in touch today to book a free discovery call.