SUBSCRIPTIONS IMPROVE CASH FLOW MANAGEMENT 

New research from Uswitch business savings accounts experts reveals how offering subscription-based services is helping SMEs across the UK gain tighter control over their finances and build customer retention.

The findings reveal that the vast majority of SME owners (86%)[4] believe a subscription model helps improve cash flow management, offering a more predictable and manageable income stream.

Subscriptions help SMEs plan for growth 

Nearly half of SME owners (46%) have already integrated subscriptions into their businesses.[1] Whether they’re offering curated product boxes, regular services, or consultancy retainers, this shift is helping entrepreneurs move away from one-off sales in favour of more consistent income.

Among the key benefits cited by nearly half of SME owners, voted in a multiple choice survey question:

• 46% say subscriptions improve customer retention

• 46% cite better business planning

• 43% say they offer more predictable cash flow[5]

Younger entrepreneurs are driving the shift

The data also reveals that young entrepreneurs (aged 18 to 34) are 32% more likely to use subscription models than those aged 55+.[6] A staggering 94% of younger SME owners say subscription-based services help improve cash flow, compared to just 70% of baby boomers.[2]

This generational shift highlights how younger business owners are more likely to embrace recurring revenue models to manage finances more effectively and navigate market uncertainty.

Challenges to adoption remain

Despite the reported benefits, many SMEs still find it difficult to adopt a subscription model. Among those yet to make the switch, the top barriers cited were:

• Uncertainty about return on investment (30%)

• Difficulty changing existing pricing structures (27%)

• Complex billing or tech setup (26%)

• Our business model doesn’t suit subscriptions (25%)

• Lack of customer interest or demand (25%)[7]

For many, the hesitancy lies in shifting operational strategy and investing in new tools or platforms to support recurring payments. Some SMEs may struggle to adapt their existing models or remain unconvinced about the value subscription offerings could bring, with almost one in three (30%) small business owners saying they remain uncertain about the return on investment associated with deploying a subscription model.

Still, with over 46% already using subscriptions and another 21% actively exploring them, the trend is clearly on the rise.[8]

The subscription habits driving SME opportunities 

As SMEs increasingly turn to subscription models to drive recurring revenue, it’s essential to understand the behaviours of the UK’s consumer base, and the opportunities they present. On average, UK consumers now spend £696 per year, or £58 per month, on subscriptions.[9]

Subscription popularity remains high across key categories: video streaming services, retail, music, gaming and food.[10] 

Popularity by category in the UK: 

UK consumers typically hold an average of 3.3 subscriptions[10]. Notably, 63% of UK consumers say they maintain at least one subscription permanently, highlighting the potential for long-term customer loyalty.

However, signs of subscription fatigue are beginning to surface. The growth of new digital subscription acquisitions declined from 4.1% in 2021 to 2.8% in 2024.[11] Additionally, 55% of consumers reported cancelling subscriptions due to unclear pricing changes, while 70% say they value flexibility, preferring services that allow them to adjust or cancel without penalty.[12]

This growing demand for transparency and adaptability reflects a broader opportunity for SMEs: by offering flexible, well-communicated subscription options that have a clear value-add for the customer, businesses can build trust and boost retention.

The subscription economy offers great opportunities for B2B companies

Despite subscriptions being commonly associated with consumers and video streaming services such as Netflix, B2B companies have also had great success in this field. For small and medium-sized enterprises operating in the B2B space, the subscription economy offers a powerful way to stabilise revenue, build long-term customer relationships and reduce reliance on one-off transactions. 

In competitive markets where customer acquisition costs are high, retaining clients through ongoing value and predictable service delivery can be far more cost-effective than constantly chasing new business. In fact, research shows that by strengthening customer loyalty, SMEs could increase revenue by as much as £66,000 annually for their B2B services.[13]

Andy Elder, Uswitch business savings account expert said:

“Recurring revenue models aren’t just for big tech companies. We’re now seeing small businesses across retail, consultancy, and services adapt subscription models to create predictable income streams and strengthen their cash flow.

“For many small businesses, managing cash flow is one of the most difficult tasks, especially when payment cycles are unpredictable. Subscriptions could give SMEs more control, helping them plan ahead and reduce reliance on traditional lending or experiencing last-minute funding gaps.”

Ways SMEs can make subscription models work for them, according to business expert Andy Elder

If you’re considering introducing a subscription element to your business, here are a few practical steps to get started:

1. Start small: Introduce a simple subscription offering as an add-on or loyalty option for existing customers to test interest and feasibility.

2. Focus on value: Offer services or products that truly add value on a recurring basis. This can include maintenance packages, regular check-ins, or exclusive discounts.

3. Use digital tools: Automate recurring payments using reliable tools and ensure customer management systems are set up to track renewals and cancellations.

4. Manage cash flow with a business savings account: If subscriptions increase your income stability, consider using a business savings account to build a cash buffer or reinvest profits strategically.

5. Communicate clearly: Transparency around billing, cancellation policies and benefits will build trust and help get customers on board.

The subscription economy is no longer limited to streaming services and SaaS platforms. SMEs can capitalise on this shift to strengthen resilience, improve retention, and achieve more sustainable growth.