In the latest report from RSM Tenon (reported on the SBF blog), it was quoted that 1 in 10 SME's don’t know where to go for business advice and 13% would consider their peers ahead of seeking any professional help.
In a time where advice is available online in abundance, few would turn to the internet in favour of a friend, family member or business acquaintance instead.
I can remember when the accountant and the bank manager were at the very heart of the business community and would be the logical choice in times of need. It is evident that the banks' decision to move away from local to centralised lending centres in major cities have put pay to the former, and fee pressures and an enhanced audit threshold, have put pay to the latter.
I find it difficult to comprehend that an increasing number of SME's do not seek professional help in preparing audited accounts and why the threshold for this to be a legal requirement is so high. Although all companies and limited liability partnerships (LLPs) have to submit some form of accounts to Companies House, these accounts don't have to be audited for financial years starting before 6 April 2008 or prior to 1 October 2008 for LLPs if you:
- qualify as a small company or LLP for the purposes of filing abbreviated accounts
- have a turnover of no more than £5.6 million
- have a balance sheet total of no more than £2.8 million
I have advised and worked with SME’s over the past 20 years and I cannot recommend highly enough the benefits of third party professional advice. Cash flow forecasts are simply not prepared by the majority who rely on old fashioned gut feel to run their cash flows, and if they haven’t got the available capital then the creditors will just have to wait. However, the longer term implications are more serious.
If a business is not filing timely audited accounts, credit terms are harder to obtain and if the cash flow is managed on an ad-hoc basis without proper planning, then the owners will spend more time firefighting with its creditors than they will running the business or determining the strategic direction of their respective organisations.
My advice in all this is that good advice is an investment and if more people engaged with their accountant or bank manager then the benefits would far and away exceed the cost over time.
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