What you need to know:
- Only 48% of SMEs are using AI according to a report from Council of Small Business Australia
- However, 26% of SMEs that are leveraging AI report “significant” productivity gains.
- The biggest benefits come from combining internal use with AI-enabled partners.
- Key risks include data security and integration gaps; success hinges on strategic adoption.
Artificial Intelligence is rapidly transforming how businesses operate – streamlining analytics, enhancing decision-making and improving operational efficiency. But according to the COSBOA Small Business Perspectives Report 2025, 48% of SMEs aren’t using AI at all.
While 30% view AI as a positive opportunity and 32% acknowledge both benefits and challenges, sentiment remains mixed with businesses cautious to adopt new technology. As the report notes, “artificial intelligence is also emerging as both a potential asset and source of uncertainty.”
We unpack how small businesses can harness AI effectively – and the key risks to navigate along the way.
How Australian SMEs are feeling about AI
Despite growing awareness, many Australian SMEs remain hesitant about adopting AI. The COSBOA Small Business Perspectives Report 2025 reveals a split mindset:
- 30% see AI as an opportunity to improve efficiency or grow
- 32% acknowledge both benefits and challenges
- Just 5% view AI as a potential threat
While interest is growing, adoption is still limited. Only 14% of SMEs have integrated AI into their operations, and nearly half aren’t using it at all. Even among those exploring AI, implementation often stalls due to limited time, resources and practical guidance.
Yet the need for tools that can enhance efficiency is clear. Many SMEs spend more than six hours a week on compliance and financial management – time that could be reclaimed through automation. Among early adopters, the benefits are tangible: 46% report productivity gains, and 26% say those gains have been significant.
Where businesses stand to benefit most from AI
Small businesses can benefit from AI in two powerful ways: by embedding it into their operations and by working with suppliers that use it to deliver faster, smarter services. The biggest gains come from combining both – improving internal workflows while choosing partners that use AI to enhance speed, service and strategic insights.
AI is already enabling more personalised financial services, using customer data to deliver tailored advice and products that improve engagement and long-term value. Looking ahead, AI-driven predictive analytics will help businesses anticipate risks and respond faster.
Core financial applications include:
- comparing inconsistently formatted datasets from different software systems
- quickly performing complete financial analyses, including generating graphs and tables and providing data-driven insights for financial planning
- evaluating new clients using discovery questions and providing rationale for decisions
- supporting first-stage evaluations of financial or business scenarios
- analysing large datasets to detect patterns consistent with fraudulent activity
- chatbots and virtual assistants that provide 24-hour customer service, reducing the operational costs of a business
- monitoring and ensuring compliance with financial regulations through automated audits
- forecasting market trends, cash flow and business outcomes
- automating invoice generation, approvals and payments
- automating tasks like note-taking during meetings or phone calls, then generating follow-up notes and action items
But AI is only as good as the systems behind it. Many SMEs still rely on siloed data and manual processes, making “plug-and-play” AI solutions less effective. Without clean, integrated data, AI can create more noise than clarity.
Success also depends on change management. Teams and customers alike may be wary of AI-driven decisions or fear job displacement. To unlock its full potential, AI adoption must be aligned with the business’s culture and goals.
The key to successful adoption? “I think the most important way to embrace it and get the most out of it is to start with the CEO and executive team,” says Justin Kabbani, an AI implementation coach and keynote speaker. “They need to understand the tools, see their capabilities and experience it themselves.”
The challenges of AI for your business
While AI holds clear promise, its adoption introduces real strategic and operational risks – particularly around data security. “The biggest roadblock [to AI adoption] is data privacy concerns,” says Justin.
As AI becomes embedded in financial systems and customer-facing platforms, it opens new vulnerabilities. Cash-flow instability is increasingly linked to cybersecurity risk, with a single breach or outage can quickly disrupt financial operations.
This concern is often amplified by uncertainty around how AI tools manage sensitive data. “Microsoft stands behind the security of information that is processed in the Copilot environment,” notes Justin.
“And the ChatGPT Team and Enterprise versions don’t learn from user data by default and have attained SOC-2 compliance to give businesses further confidence to use confidential data.”
As AI expands into regulatory and service functions – from AI-powered chatbots to automated compliance tools – SMEs must ensure their providers meet the same high standards for governance, data protection and resilience that they expect within their own business. A weak link in the chain can still expose you to financial, legal or reputational fallout.
At the same time, AI can strengthen protection. Real-time fraud detection tools are becoming more effective at spotting suspicious activity and taking immediate action to prevent it.
How to make AI work for your businesses
The challenge for small businesses is no longer whether to adopt AI, but how to use it effectively and unlock its full potential.
From streamlining operations to enhancing decision-making, the benefits of AI for Australian businesses are becoming harder to ignore. But meaningful adoption depends on having clean data, clear governance and robust security systems in place first.
For SMEs, success means applying AI where it delivers real value, empowering teams through training, and working with providers who prioritise security. Those who take a strategic, measured approach will be best placed to turn AI from a buzzword into a genuine business advantage.
In a rapidly evolving business landscape, a steady partner makes all the difference. Whether you’re navigating new technologies, shifting economic conditions or growing operational demands, Octet gives you the confidence to move forward. With flexible working capital solutions and a deep understanding of business finance, we’re here to support your business at every stage of growth. Discover how Octet can help power what’s next.
Disclaimer: These comments are only our views and should not be construed as advice. You should act using your own information and judgment. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgment as at the date of publication and are subject to change without notice.
