By Daniel Hunter
Financial directors, in a survey of more than a hundred small to medium-sized enterprises (SMEs), to determine the most important factors when choosing an accounting firm rated 'challenge' as the most important factor. 87% said what they wanted most was to be challenged.
The survey, which was carried out by SKS Business Services, a firm of chartered accountants that provides a unique blend of ‘shared services’ and UK based accounting services, set out to establish what are the most important factors in determining an SME’s choice of accountant.
Price is a key factor amongst SMEs with only 53% of finance directors saying that they would pay higher fees for better services. However, over 70% of directors expect to get additional business advice on matters such as tax, budgeting and profitability as part of the service.
Most surprisingly, only 55% of respondents actively use monthly management accounts. It appears that many senior managers are making crucial business decisions without referring to regular real-time financial information.
Ian Herbert, Deputy Director at the Centre for Global Sourcing and Services and Senior Lecturer at Loughborough University School of Business and Economics said: “The survey shows another side to the funding problems of small and medium sized businesses. To lend confidently banks need to know where a business is going and that it is being controlled properly, in other words that there is a proper management accounting information system in place. Any lack of regular, objective, insight into the performance and prospects of a business means potential risk, and risks means higher interest rates, or worse still no funding at all.
“People should expect the same level of information and insight about their business performance as they expect their mobile phone to give them about football scores or whatever!”
Sanjay Swarup, Director of SKS Business Services said: “Smaller companies have the same need to drive efficiency as the "BP's" of this world. It would seem that many companies are operating their accounting/finance function using traditional methods and expecting their accountants to come up with radical or magical solutions.
“SMEs are not using the latest technologies and access to global knowledge to provide clear, comprehensive and regular reports to help minimise cost and improve performance. Taking this approach enables businesses to concentrate more on growth, profitability and strategy.
“By focussing more on core strategies and less on sub-optimal functions such as accounting, SMEs can make immediate savings of £10,000 which for larger companies can rise to several millions.”
The survey also found that for SMEs trust is very important with comments such as: “Trust is what matters most” and “Trustworthy, fast and efficient is what counts” regularly coming up in the survey. But interestingly trust is not necessarily based on face-to-face contact. Only 50% of SME finance directors said that meeting with a senior accounting partner was of high or very high importance.
Also to emerge in the survey is that a large number of SMEs feel neglected by their accountants, or not important enough to get the proper attention they think they deserve. “We find we are neglected by our accountants” or “We are not important enough for them” are just a few of the quotes.
Outsourcing or offshoring some of the work to another country was not acceptable to 70% of companies. This response was mainly based on preconceptions of offshoring rather than actual experience. Offshoring was associated with cultural and language barriers and the perception that it could lead to a loss of interaction and delivery problems.
Ian Herbert, Loughborough University, said: “Until recently, the idea of shared services has been seen as a cost-play applicable only to large companies but, using the right expertise, at the right time, in the right way, it is important to any business. At the Loughborough Centre for Global Sourcing and Services we are seeing more examples of second tier businesses letting go of parts of their back office administration and it’s not just about cost.
“Standardised IT platforms and robust internet connectivity are enabling new possibilities for more imaginative sourcing solutions. The old mantras about being different to other businesses have been kicked into the long grass by B2B platforms such as ebay. The process is the same whether it’s an elephant or an antique stamp! Sometimes, if the business can adapt itself to a good system then the possibilities for quality management accounting information expand not diminish.
“For a reality check, look up your buyer history on ebay and ask whether you could get anything like that information as fast from your business accounting system? And then think that someone, somewhere in the world is doing all that for you and you don’t even have to train them, buy them a desk, or invite them to the staff Christmas party.”
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