Accountants debate bad finance habits of SMEs

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Rachael Power
Community Correspondent
Sift Media
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Lack of budgeting and planning, incomplete and late records and not watching their cashflow are just some of the bad habits of SME clients, according to accountants.

In the newest series of our video conversations with cloud accounting software firm Exact, owner of Atria Associates Paul Scholes and director of Clarand Accountants Claire Priestley discuss the relationships they have with their...

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By redboam
13th Nov 2013 19:46

Online Planning and Forecasting

One of our clients has started producing profit and cash flow forecasts using Figurewizard. It's an interesting site because just about any fool can use it and the forecasts appear to be comprehensive.



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14th Nov 2013 10:42

With SME's

they tend to fall into 2 categories. The business that's full of ideas, forecasts and wants to use the latest technology to advance their corner. Then you have the person that is good at their work and doesn't actually have a clue about paperwork and hasn't the money to pay for all the new fangled techno stuff nor the time to spend on economics. These days there aren't many in between.

To advise clients properly Accountants have to be up to speed. Years ago we only had self assessment to deal with. Now technology is taking over too quick for people to grasp. You get one thing just about sorted and then it changes for something else. Europe doesn't help with their overburdening changes (which seem to be just for changes sake).

I cannot see these bad habits going away because the "generators" are not always the "most economic".

As for clients. I like em all.

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29th Nov 2013 23:56

It's hard to make startups profitable
We had a massive campaign that lasted quite a while, targeting startups and offering to help them get organised and be successful.

We also had a really good relationship with most of the bank managers who dealt with startup businesses and referred quite a lot to us.

What I found was that many people had started in business without any preparation - either through redundancy, or by leaving their job with a couple of short term opportunities.

Very few had a plan for what they really wanted to achieve and couldn't afford to invest in us helping them create one. That applies to the business plan and forecasts/budgets.

I also see the problems mentioned above with a lot of SMEs, no plan, budget or forecast, meaning they don't know what to expect and quite often get cash flow problems.

I've also found a lot of problems with established SMEs who don't have adequate accounting records. You can tell them what needs to change, offer free training and so on, but if they don't listen/change then you're wasting your breath.

I had a client that went into liquidation earlier this year for many of the reasons listed above:
1) chased turnover rather than profit
2) very poor accounting record
3) no budget or cash flow or business plan
4) no marketing plan - they were reliant on new customers from word of mouth etc

We had agreed a solution to many of them, before it was too late, but the big issue they had was time/priority management so nothing happened.

I'm now working with them again and i think they'll actually succeed - the foundations will be in place this time.

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