Controlling Business Finances

Dear

We are writing to you as part of our general policy of drawing to your attention things which we think might help you with running your business. We noticed recently a survey commissioned by Clearlybusiness, a small and medium size enterprise (SME) website, which highlighted the consequences of poor understanding and control of business finances.

As you know, the financial activities of any business are summarised once a year in the annual accounts. Big businesses have specialist departments to analyse the figures in the accounts to understand what is going on in every department and at every stage of the business.

The SME is a far less complex organisation but can benefit immeasurably by understanding the relationships between the figures in their accounts (the business ratios) and how to use them.

The Clearlybusiness survey revealed that 75% of SMEs had significant financial problems over the past twelve months and it identified in particular that:

• over a third of SMEs never monitored their budgets against actual performance;
• ten percent never looked at the profit performance of their business;
• nearly half set prices without having any idea of their costs of providing the goods or service.

The report concluded that about 35% of insolvencies would have been avoided by seeking advice earlier.

When your next accounts are prepared for your business, if you would like some assistance with reviewing the results by reference to the key performance indicators for your business sector, please get in touch so that we can arrange an appointment.