Share this content

Small businesses suffering accounting skills gap

1st Apr 2015
Share this content
AIA

Over a third of those responsible for finance in small to medium sized businesses do not have a relevant qualification, according to research by the Association of Accounting Technicians (AAT).

Owing to this skills gap, every small to medium sized business in the UK could have lost an average of £1,277 due to issues such as tax miscalculations, unpaid invoices and fines.

Altogether, this is the equivalent of £2.9bn across the UK economy.

“Running a small business always involves juggling a lot of different priorities,” said Mark Farrar, chief executive of the AAT.

“With so much to think about, investing in a qualified member of staff to look after finance and accounting is often seen as a big step.”

The AAT’s research found that 60% of small business owners are responsible for their company’s finances on a day-to-day basis. Just 26% of small businesses surveyed said they have one or more dedicated members of staff looking after finance or accounts.

"What’s worrying is that many business owners think that finance and accounting for their business isn’t complex enough to need a qualification, and that whoever looks after it can just learn on the job,” said Farrar.

“The fact that businesses are losing money through accounting mistakes shows that this isn’t the case. Small businesses are often fragile, especially in their first few years, and every pound matters.”

Replies (9)

Please login or register to join the discussion.

By johngroganjga
02nd Apr 2015 10:20

This story is misconceived.

The typical small business outsources the work that it can't or doesn't want to do itself to external accountants doesn't it?

Thanks (4)
avatar
By johnjenkins
02nd Apr 2015 14:18

Totally agree

John. In fact I will go as far a saying the bods that actually do the work could well be more qualified in experience to do the job, because they would have more insight as to how the business is run.

Could this story be a ploy to get more people to join AAT?

Thanks (2)
Replying to hannahaston:
avatar
By MattG
02nd Apr 2015 15:19

Surely not.....!

johnjenkins wrote:

Could this story be a ploy to get more people to join AAT?

 

Surely not......!

Figures don't really stack up do they:

"Owing to this skills gap, every small to medium sized business in the UK could have lost an average of £1,277 due to issues such as tax miscalculations, unpaid invoices and fines."

So I can risk losing an average of £1,277 or pay for a qualified bookkeeper then? Even at minimum wage that's less than 4 hours per week and clearly at that level you'd just outsource it as johngroganjga suggests and save yourself the employment complications. If they are saying small businesses should contract the work to suitably competent people (and I say competent no qualified, so as not to re-open that particular debate) then I'm sure we'd agree, but that's not what it says above.

Also the SME definition can cover some fairly sizable and complex businesses, is the AAT not on a sticky wicket here, unless they point out that they themselves may not be competent/qualified to undertake some of the work associated with these businesses?

Thanks (0)
avatar
By KWest
06th Apr 2015 12:58

What's the Problem?

With modern accounting packages such as quick books or kashflow doing all of the work for small companies, the only likely cause for concern would be getting the input wrong. In addition profit and cash flow planning using something like figurewizard is more than adequate to produce accurate forecasts for the average SME.

Thanks (2)
Replying to lionofludesch:
By ireallyshouldknowthisbut
07th Apr 2015 09:31

.

KWest wrote:

With modern accounting packages such as quick books or kashflow doing all of the work for small companies, the only likely cause for concern would be getting the input wrong. In addition profit and cash flow planning using something like figurewizard is more than adequate to produce accurate forecasts for the average SME.

 

This is 100% the issue, garbage in:garbage out

Its not a software issue, its an understanding one. 

But agree with the above this is just another press release. 

Thanks (2)
avatar
By Jack Jackson
08th Apr 2015 12:13

If this isn't an AAT Advert.......

I have worked with many people who call themselves "accountants" because they hold a little scroll or certificate saying that they have read a text book or two and remembered how to do something on an exam paper. I'm sure there are just as many mistakes made by "accountants" and even larger wastes of money by being too over complicated in their approach to things.

I am not qualified, and have built up a career with good experience gleaned from working with some good people. Even my ancient mother in law is able to input an invoice and pay it to avoid repercussions, and she can't even spell "qualification".

 

  

  

Thanks (0)
avatar
By Younis
08th Apr 2015 12:33

AAT, could you please provide us with your initial data collected and questionnaire of the research conducted in order to verify your controversial outcome?

Beside that, I fully agree with:

@ Johngroganjga

"This story is misconceived".

 

@ Johnjenkins

"Could this story be a ploy to get more people to join AAT?".

Thanks (0)
avatar
By kiwilondon99
08th Apr 2015 15:48

the case for interims direct - or added value services from

 

well from the profession

the interim FD or Fc with commercial + financial - not full time - portfolio basis is a massive value add to most of these SME's.  

The larger practices [ ie probably not sole practitioner]  should be able to upsell some additional [ to bookeeping] skills and find that they are able to offer a lot more to their  clients - because they get to know their client [ a very important and relevant professional need ! ]

a good booker is fine for record keeping but timeliness and commercial appreciation is another matter

do agree with Johns open post !

Thanks (0)
avatar
By twickers
09th Apr 2015 14:53

SME accounting

   The ACCA should remember their origins ?/ when all of them were  experienced but unqualified/ and the Association was formed to give them a voice/  However now chartered they appear to be suggesting the lack of a piece of paper makes the current such group

of a "lower " cast ?/  "untouchable"/  as with the ACA/  the ACA however recently took over

the Financial Accountants/  a group similar in origin to ACCA/ "experience but unqualified" 
which in theory now makes them part of ACA and therefore superior to ACCA/AAT ?

I agree with "John"

Thanks (0)