Why SMEs need staff with financial experience
More than a third of people that deal with the finances at SMEs lack the relevant qualifications, new research has suggested.
Every SME may have lost an average of £1,277 as a result, the Association of Accounting Technicians has revealed.
These financial costs come from tax miscalculations, unpaid invoices and fines for failing to complete the necessary paperwork.
This amounts to nearly £2.9 billion across the UK economy, with £508 per company lost due to tax miscalculations, £399 from invoices that are not issued and £257 for payments bouncing back.
In smaller businesses, it was discovered that staff have a wide number of roles and in many cases the financial aspects were shared by staff without the correct qualifications.
This means some of the key paperwork is not completed correctly while three in five business owners have put themselves in charge, although it places strain on their time and causes stress.
Just one in four SMEs were found to have dedicated staff members that deal with their finances, suggesting firms are not taking their finances as seriously as they should be.
A third of business owners believe the role isn’t required as it isn’t complicated enough to require qualifications while a similar number say it isn’t a big enough part of their company to justify training someone.
Cost was also found to be an issue as a quarter of firms said they did not have the finances available to train staff while 10% believes the process is just too expensive.
Good financial management will form the basis of any long term business success yet it appears as though firms are risking making losses and even insolvency by not doing it effectively.
Small businesses can face particular risk in their early days as finances are not always readily available, which means avoiding losses as a result of poor accounting is paramount.
The research also highlighted that firms lack sufficient training methods for staff and that one in six doesn’t invest at all.
As a result, they were risking losing their staff to larger companies with better training, which costs an estimated £3,300 or more per every staff member lost.
By Phil Smith