February 08, 2013
Many UK SMEs do not understand their own business finances, according to the annual Credit Check report by ABN AMRO Commercial Finance.
Less than half (39%) of UK accountants believe their clients understand their finances, while more than half (51%) believe SMEs do not feel in control of their financial affairs.
ABN AMRO Commercial Finance surveyed 200 accountants in November 2012. It also found:
On average, accountants report that only 15% of clients proactively discuss their finances with them on a weekly basis. More than a third (41%) only do so once or twice a year.
In addition, 59% of the accountants polled say businesses often respond with knee-jerk, short-term reactions, rather than planning ahead.
Peter Ewen, managing director at ABN AMRO Commercial Finance, said: “Many SMEs have replaced financial management with a ‘batten down the hatches’ mentality and are failing to focus on finance just when it matters the most. Despite the challenges of the last few years, business owners cannot afford to lose control. They must look to educate themselves and plan ahead or risk being overtaken by the competition.”
The accountants surveyed also said that many SMEs continue to use traditional bank overdrafts as a primary source of funding — 61% of their clients have a traditional business overdraft and 52% use their personal bank rather than shopping around.