Press Room - The Issues

Owner managers need an easy to use, jargon free and time-saving accounting system.

Poor financial management and planning contributes to the closure of 100,000 SMEs each year in the UK. Many small businesses do not integrate accounting practices to a reasonable level causing a lack of financial control and consequent cash flow problems. This is one of the contributory factors to the failure of 70 per cent of businesses within their first year.

The inherent problem is that owner managers are not accountants, nor are they necessarily skilled users of IT - and they don’t have the time to learn. Too often "accountancy software" is designed for accountants, not busy owner managers. Applications that are supposed to make managing business accounts easier can be excessively complicated and far from user friendly.

Time is money

One third of SMEs (33 per cent) feel that they spend too much time dealing with non-core business activities like paperwork, credit control, and statutory financial requirements. For example, 58 per cent of all SMEs state that they could increase productivity if they didn’t have to chase invoices. Learning to be an accountant and how to use complicated software is often not feasible for the busy owner manager.

They need a simple, jargon-free accounting system to manage their accounts that is designed for owner managers, not accountants. They need hands-on control over their finances and clear business intelligence that is easy to understand and act on.

Many small businesses are not managing their accounts effectively

Research by KashFlow found that almost half of micro businesses (49.8 per cent) manage their financial accounts manually, using only paper and pen. Small wonder that SMEs are concerned about the time it takes. Only one in five micro businesses (20.88 per cent) use bespoke accountancy software to manage their accounts.

The research revealed that the primary reasons owner managers give for not using a computerised system are simplicity and the pressures of time and cost of implementing a computerised accounts system.

Manual methods of account management are inefficient, time consuming and are often a false economy. Once the data is passed onto professional accountants it must generally be entered into an accountancy system. If owner managers use an effective computerised system, they can minimise the time it takes an accountant to produce end-of-year accounts, subsequently reducing the accountant’s fee.

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