Research from an expert panel of Association of Accounting Technicians (AAT) licenced accountants has found that four in five smaller and medium sized companies have someone who is not in a qualified financial role managing their financial processes, resulting in potential average losses of around £15,000 a year. The findings highlighted key threats to growth for these companies, including: failure to make a financial plan, misunderstanding cash flow and not setting aside capital to pay tax. Alongside engaging an external accountant, AAT is urging smaller and medium sized companies to find their own ‘hidden accountant’ by upskilling existing staff to help deliver sustainable growth.
AAT has created a five-point check list for SMEs to encourage better planning and support growth this financial year:
- Set up a reserve bank account for a ‘rainy day’ fund
- Ringfence a percentage of regular income to pay for tax and VAT later in the financial year
- Spend strategically on investments that will deliver growth (e.g. marketing)
- Mark key tax dates on a calendar to plan ahead
- Find your business’ ‘hidden accountant’ – e.g. upskill a member of your staff in accountancy skills
The long-term benefits of upskilling are clear as four in five of the panel believed accountancy skills learnt by employees will still be vital in their workplace 10 years from now. They also believed upskilling gave them other benefits in the workplace such as increased confidence, analytical thinking, better communication skills, and more gravitas with colleagues.
To learn more about accountancy upskilling go to www.aat.org.uk/train-your-staff
Adam Harper, Director of Strategy and Professional Standards at AAT, commented saying: “Effective financial planning is critical for SMEs as they often lack the funds to manage an unexpected crisis. There are a number of simple things every business can do to avoid some of the most common financial pitfalls, and free resources, such as the business advice website Informi, can prove invaluable in helping companies recognise areas in which they can improve their management of finances.
“As we are just a few weeks into the new financial year, we are advising SMEs to make use of finance skills as early as possible to help deliver sustainable growth. Businesses can engage an external accountant to provide vital support but should also consider looking for their own ‘hidden accountant’ - that colleague who is best placed to upskill and keep your business in good financial shape on a day-to-day basis.”