Are the annual accounts and tax return enough?
Business Advisory Services Update
Absolutely not!
One of the real problems confronting SMEs is that most professional accounting firms are only concentrating on the production of an annual set of accounts and taxation return for business operators.
All businesses need far more ‘FINANCIAL INFORMATION’.
The CEO of MYOB, Paul Robson, outlined the position very clearly in an article published in the Financial Review last week:
“The outlook is much gloomier for SMEs than for big corporates.”
“There are five or so areas that small business are calling out as creating a major pressure, which are all around the cost of doing business, like utilities, with significant increases in input costs, so electricity, water and fuel prices,” Robson says. “There’s the cost of capital obviously – so interest rates – but the final one is just managing general cash flow.”
Robson also referred to general metric information such as the number of invoices being generated and the average value of an invoice when compared to average values in a similar period last year.
What this is highlighting is that businesses need a lot more accounting input than just the preparation of annual accounts and a tax return. This requirement is not only in the direct financial data, but also in the business metrics, budgets and cash flow forecasts. Some SMEs will prepare this information themselves. However, many of them are too busy trying to ensure that their business survives and that they don’t fall into one of the disheartening indicators that apply to SMEs.
“A large number of small businesses go out of business in their first six months, not because their idea was a bad one, but because the fiscal management was poor,” Robson said.
SMEs need more assistance from their accounting team otherwise the failure rate will continue.
SMEs need monthly financial accounts, business metrics, cash flow advice, costing advice to reflect the increasing costs of operating a business.
This is accounting work that will directly benefit the SME now!
ESS BIZTOOLS provides ‘Product Packages’ to assist accountants/bookkeepers to supply REAL ACCOUNTING INFORMATION to SMEs. To find out more, contact us on 1800 232 088 or email .
