By Daniel Hunter

Small businesses with well-developed finance teams achieve faster, more sustainable growth for longer and can attract investment to help them develop, says ACCA (the Association of Chartered Certified Accountants).

A new report from ACCA — Accountants for small business — says that the SME finance function plays a critical role at different stages of an SME’s growth in attracting investment and helping them “emerge from the shadows”. ACCA says that SMEs need to make themselves ready and in shape to be able to receive finance and that the burden should not be solely on the lender or investor.

“There is considerable evidence which shows growth is much stronger amongst SMEs with a comprehensive finance function backing them up," Rosana Mirkovic, ACCA Head of SME Policy, said.

"The role of the accountant in an SME setting goes well beyond the basics of bookkeeping. Their role is vital at different stages of an SME’s development.

“Credit providers, supply chain partners and other stakeholders need a wealth of information form the finance team of an SME. For some investors the information they require changes after investment to focus on other aspects of the business, such as agreed milestones. Finance professionals are central to providing that insight into the business at all stages.

“Day to day financial management is the key to accessing finance. By the time the owner/manager decides to apply for any kind of funding, their chances of getting it are mostly locked in by the way they’ve run their business to date. Independent research confirms that a well-run finance function staffed with appropriately trained people makes SMEs more creditworthy and investment-ready, and is a cause, not a consequence of growth. Despite that fact, most SMEs don’t take advice before applying for loans; most have no trained staff in charge of their finances; and most don’t produce regular management reports.

“While focus has largely been on who won’t lend to SMEs, small businesses have a part to play in making themselves finance-ready.”

ACCA points to BDRC SME Finance Monitor statistics which show that in the UK, for example, 17.4 per cent of SMEs with regular management reporting, a formal written business plan and financially trained staff grew more than 30 per cent and 10 per cent of those companies had a minimum risk rating. Just 7.5 per cent of SMEs without that financial expertise and support grew 30 per cent and only 2.5 per cent had a minimum risk rating.

Rosana Mirkovic added: “Our research, and that of others highlighted in our report, points in the same direction — the role of finance professionals is widening and taking on a more business-focused nature, which is of particular importance for SMEs. From their infancy to their eventual growth into something larger and beyond, the role of their finance function changes and adapts to suit the needs of the business.

"The accountants who help a new start-up get off the ground will play a very different, but equally critical role when that business is in full, sustainable growth mode. It is for this reason that ACCA trains its members to be skilled in a broad range of abilities to make them complete finance professionals.

“Of course, we would always highlight the benefit ACCA accountants bring to any business, but the figures point to a more sure-footing for SMEs who have a rounded finance function behind them. There is clearly a significant difference between the SMEs embracing a comprehensive finance function and those who are less committed to being financially robust in their operations, even after accounting for influences such as business size, age or sector.

"High-growth firms are most likely to reach their maximum growth rate just three years from registration, which means that at such an important period of change, having a finance professional on board that can support the business from start to high growth and beyond is clearly important.”

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