SMEs Need Support Throughout The Year
Advisory Services News - Issue 43
Good day!
Welcome to this update on ESS BIZTOOLS ADVISORY SERVICES NEWS.
SMES NEED SUPPORT THROUGHOUT THE YEAR
The SME market is facing many challenges. We discussed these over the last couple of days.
Accountants and Bookkeepers are the logical groups (though not necessarily the only groups) who can provide business-related advice to SMEs.
A significant challenge is that SMEs need accounting support throughout the year - not just at the end of the financial year in a meeting primarily focused on calculating income tax payable. While that information is important, it does not assist in planning strategies to help the business survive in the current 12 months.
In earlier articles, we referred to comments made by MYOB CEO Paul Robson about the problems SMEs encounter in their business operations:
Debtors’ Management: SMEs need advice on establishing a debtor’s system.
Suppliers: People contemplating starting a business should be encouraged to contact potential suppliers before signing any contracts or quitting their current jobs. This will help determine the payment terms for key suppliers. Some suppliers impose very tough conditions like cash with order or cash on delivery. If the SME expects an automatic credit facility with 30 day payment terms, they may be disappointed.
Tax Office Payments: Mr. Robson indicated that after 6 months, this becomes a major issue because the new business operator has not set money aside to pay the Tax Office. The dates and amounts for payments need to be determined and included in Budgets and Cash Flow Forecasts.
Budgets and Cash Flow Forecasts: These are vital for businesses and should be the "Financial Interpretation of the Business Plan". This document highlights when the business is likely to encounter financial problems, which should be examined as early as possible to build in some protection for the business when those problems arise.
The 52-week Business Enhancement System provides SMEs with a workable model to produce management information:
On a Daily Basis: A one-page report relating to the previous day's activities — sales, debtors balance, amount of money owed in the next week, cash in the bank, gross profit percentage, and average sale. Your client may have additional information they would like to see available for the leadership team daily.
Weekly Basis: The ideal document is the Weekly Performance Report (Key Performance Indicators and Business Metrics relating to individual business activities) and the profitability estimate for each business activity. This report will immediately highlight any issues that need to be investigated and fixed.
If the weekly reports are not prepared, problems could persist for many weeks and potentially the rest of the financial year. It is true that issues should be identified in the Annual Financial Accounts, but it may be too late to recover lost income, potentially leading to business failure and bankruptcy for the SME business operator.
Monthly Financial Accounts: These provide a complete summary, including Key Performance Indicators and Business Metrics, and a comparison to the budget report to be prepared and analysed.
ESS BIZTOOLS has developed a comprehensive range of product packages and training programs to assist Accountants and Bookkeepers in delivering effective Advisory Services to SME clients.
Please visit www.essbiztools.com.au for a full overview of the four product packages developed by ESS BIZTOOLS. If you would like a one-on-one complimentary review Zoom meeting with our Founder and Managing Director, Peter Towers, please email us at .
