There is a new mantra for SMEs

Inflation over 7%, interest rates rising, unemployment about 3.5%, business failures are increasing, cost of living is rising very fast.

Debtors days outstanding are increasing – causing cash flow issues for many businesses.

This is the scene for thousands of SMEs around Australia.

Thomson Reuters’ recent White Paper clearly identified the new mantra for SMEs: “The Past Has No Future”.

Accountants need to assist in planning their SMEs’ future, which is very difficult to predict as the recent past is not a guide.

Many SME clients are going to need assistance in the preparation of budgets, cash flow forecasts and projected balance sheets so that they have the data that lenders will be seeking if they are going to apply for a loan or, if they are inclined to make attempts in raising capital. They need all of this information and more, in order to utilise Crowd Sourced Funding Equity Raising, Early-Stage Innovation Company if they are a very small company, or Section 708 of the Corporations Act.

SMEs also need assistance in the determination of appropriate key performance indicators and ratios, which all enable them to clearly analyse their financial performance and compare daily, weekly, monthly key indicators with what occurred in previous periods, so that they can analyse the reasons for changes and try to fix them as quickly as possible.

Many SMEs will also benefit from their accountant reviewing their business performance against their peers, by utilising benchmarking reports, which will facilitate the clear identification of data that appears to be irregular.

Unfortunately, this type of approach has not been what most accountancy firms have been offering in the past, but this approach will be the new mantra for SMEs.

Accountants need to react to this challenge! You could start by attending the complimentary webinar – “The Past Has No Future” – being presented today at 12pm AEST. Click here to register.