Partner Article

The right time to grow sustainably

Adam Harper, Director of Strategy and Professional Standards, AAT (Association of Accounting Technicians)

Small businesses are a crucial part of the UK economy. They make up more than 99% of private businesses and often serve as anchors for local economies.

Yet many fly too close to the sun when it comes to financial management. A panel of AAT Licensed Accountants recently told us that small businesses are in urgent need of more accountancy skills; however the majority of them only access professional accountancy support two years after starting up.

Failure to bring in accountancy skills at the right time for your business can lead to lasting, costly consequences. Our panel reported that, on average, poor financial management could cost businesses £15,870 each year. This is not a negligible amount of money; losses of this size can be catastrophic for most small businesses, and terminal for many.

Of course, professional support is not far away. Businesses can either instruct freelance consultancy services, for which there are many thousands of licenced accountants and bookkeepers across the UK, and/or put staff within the business through training. Indeed, according to the panel, four in five small businesses do not have a financially trained employee. Who’s keeping the books up to date, watching the cash flow or dealing with expenses and budgeting?

Businesses often need to work quickly and efficiently to facilitate growth, but in order to do this you need the right individuals with the right mix of skills. Much of the time, it is small business owners themselves that look after finances, or delegate to others who may lack the requisite skills.

Maybe there is an individual you already employ who has the capacity and capability, with some training, to become responsible for overseeing your financial planning and working with external accountants in order to, for example, meet your tax responsibilities. The long-term benefits of training are clear – it is cost-effective and time efficient, and can significantly improve employee retention. Four in five of the panel said that taking an accounting qualification gave them additional benefits in the workplace such as analytical thinking, confidence, gravitas and communication skills, with 78% adding that they believe the skills gained now will still be fully relevant to workplaces ten years from now.

Fresh into the new financial year, now might be a great time for you to evaluate which of your employees is best placed to gain skills that can keep your business in a strong financial position for the years to come. It may prove critical to your company’s future success.

This was posted in Bdaily's Members' News section by Association of Accounting Technicians .