Are you fully in control of your business’s finance? This starts with having a full understanding of all the aspects of your cash flow and funding, but according to new research, this isn’t something that all business owners have. According to ABN AMRO Commercial Finance, many small and medium sized businesses don’t understand their finances fully – are you up to speed?
This new research has shown that less than half (39%) of UK accountants believe that their business clients understand their finances, with more than half (51%) believing SMEs don’t feel fully in control of their money. This survey was conducted amongst 200 accountants with clients of various sizes, giving a good cross section of the UK business sector.
Nearly half of the accountants interviewed said their clients found their finances complicated and confusing while 40% said many SMEs were burying their head in the sand with regard to their financial affairs. This highlights the importance of knowing what your money situation is, as you can never make wise business decisions with incomplete information, especially when it comes to finance.
On average, only 15% said their clients proactively discussed their finances with them on a weekly basis, with 41% saying this happened only once or twice a year. Instead, the short term panic reaction was more common – this was a response that 59% of accountants backed up.
In this difficult economic climate, many businesses are replacing proper financial management with a ‘batten down the hatches’ mentality to weather the storm. However, if you take all the proper steps to managing your finances responsibly, you could uncover opportunities for growth or enjoy greater control over the direction of your business. By knowing what type of funding would most benefit your business, you can boost turnover and reduce bad debt – for example, if you realise you’re struggling with cash flow due to customer late payment, then invoice finance might be a good option for you. As with anything, it really does pay to be properly informed!