Good bookkeeper will lead your business and influence your business decisions. What is well understood by accounting professionals is unfortunately still not by many of the UK's small business owners, as revealed by recent KPMG Small Business Accounting survey https://kpmgsmallbusiness.co.uk/news/1-billion-shortfall-as-small...
Despite the fact that half of the small business proprietors have no financial training, two fifths prepare their own accounts without any assistance at all!
The average SME owner spends two and a half hour per week on their accounts - a task they are generally unqualified to perform. ICB recently reported on a Worldpay survey http://www.worldpay.com that revealed almost a fifth of SME owners still rely on pen and paper bookkeeping!
It is therefore unsurprising that KPMG found the majority of small businesses rely on financial information that is a staggering four months out of date. In an age of cloud accounting and real time information this is absurd.
The most concerning aspect of this is that these sub-standard financial practices form the basis for long-term business decisions.
KPMG discovered that over half (51%) of small business owners “approach decisions such as hiring, or investing in materials, by making a quick calculation of available funds based on the incoming and outgoing payments they know about, or viewing their bank balance”.
Is it any wonder then that the Office of National Statistics estimates that just 41% of UK small businesses make it to their fifth birthday, with 65%, according to Xero's 'Make or Break' https://www.xero.com/uk/make-or-break report citing a financial issue as the main reason for closing up shop?
Survey shows that, two fifths of UK's SME business proprietors, are concerned about financial uncertainty, despite the strongest financial position since the crash. KPMG estimates that, were it not for this uncertainty, “small firms would have invested up to £1 billion more in the economy in the last financial year”.
KPMG found that, during last year, those businesses with accurate accounting information grew twice as quickly as those with nine-month-old data (8% versus 4%).
The results are clear then: a lack of financial certainty is slowing the growth of the UK’s SMEs.
Dan Aylward, Senior UK Economist at KPMG, said:
“The UK’s economic recovery has been driven by rising employment but growth in productivity has so far been unimpressive… Whilst the Government has championed small business as key to our future prosperity, this study shows that without up to date financial information, small businesses may struggle to reach their potential.”
There has been a concern that SME owners are unaware of the damage of their old financial practices on their business and of how efficient and affordable modern bookkeeping has become. Services offered by Certified Bookkeeper, are not a luxury but a degree of financial understanding and competence that is essential to the business growth.