The annual Credit Check report from ABN AMRO Commercial Finance found almost half (48%) of the accountants it surveyed said clients find their finances complicated and confusing while more than half (51%) believe SMEs do not feel in control of their financial affairs, states chartered accountant Harris & Co
Only a third (39%) of UK accountants believe their clients understand their finances. Over half (58%) say clients do not take the time to understand their options and almost two thirds (64%) maintain many of their clients do not spend enough time dedicated to financial management.
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. As a result, most (59%) accountants feel businesses are often responding with knee-jerk, short term reactions, rather than planning ahead.
Peter Ewen, managing director at ABN AMRO Commercial Finance, said: ‘In this difficult economic climate, 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.’
The survey also highlighted concerns from a significant number of accountants (43%) that SMEs are using the wrong type of funding. Respondents reckoned that, on average, 61% of their clients have a traditional business overdraft and more than half (52%) prefer to use their personal bank rather than shopping around.
Ewen said: ‘In this uncertain financial climate, business owners need to take a firm hold of their finances and seek out more reliable funding, giving them a stable foundation and the confidence to make the most of the inevitable upturn