In my latest Business Finance Bulletin Episode 101 I briefly reviewed a survey which revealed that businesses which keep up to date financial records are likely to grow twice as fast as those businesses with information more than nine months old.
This is such an important topic when it comes to raising finance that I thought I’d go into it in a little more depth.
The survey was carried out by KPMG Small Business Accounting and focused on how businesses can perform better when they have up to date financial information to hand.
KPMG found that small business’ management accounts are, on average, four months out of date, not a finding I can disagree with. However, more interestingly they found a direct link between having current financial information and likely growth rates.
They discovered that those with accurate information grew twice as fast as those with nine-month-old data over the last twelve months… 8% compared to 4%. A compelling reason if there was one to keep on top of your books!
This is a finding I can relate to. In arranging commercial finance for businesses, whether that’s for additional working capital or long term funding, one question the majority of lenders will ask is ‘can we see the latest management accounts’. Those who can deliver on the request have a far higher chance of getting finance than those who can’t.
On that basis, the survey’s findings that businesses with up to date figures are growing twice as fast is true – they are simply able to grab opportunities which their less organised competitors have to let slip through their fingers because they can’t get the finance arranged quick enough.
The researchers were also able to put a number on these lost opportunities. They estimate that with better financial visibility, small firms would have invested up to £1 billion more in the economy in the last financial year. Outdated financial information is resulting in lower levels of investment, employment, stunting productivity growth and holding back the economic recovery.
Many of the business owners I meet are the first to admit that they don’t like the financial aspect of their business and yet they struggle through trying to do the books themselves (usually in the wee small hours of the morning!), The survey found that small business owners spend more than two and a half hours on average each week trying to stay on top of their finances and probably doing a poor job or giving up!
The result of all this is that many business owners are making important investment and strategic decisions on the spot without a full understanding of their current financial position.
What’s the solution?
The answer is to pass the task of keeping your financial information up to date onto a bookkeeper or your Accountant; outsource it to the professionals. Concentrate on what you’re good at and get people in who love to crunch numbers.
The upshot of all this is the next time you are presented with an opportunity which needs finance then at least myself and other finance brokers will be able to move quicker and hopefully get you that all too elusive ‘yes’.
Hi Rob, it was so interesting and entertaining listening to you at the Kevin Green Wealth Coach Workshop in Reading this weekend! I didnt realise you can find Finance proposals such fun!. Brilliant tips! Thanks.
Further to your recent presentation at LEAD Wales just wanted to say it was very refreshing to see somebody talk passionately and positively about finance, very insightful!
I wanted to thank you for such an insightful, energetic, and entertaining talk at the Kevin Green Wealth event on securing funding and creating a successful plan. It was brilliantly executed and a pleasure to listen to and the ideas I’ve learned are definitely going to help me in going forward.
Rob kindly agreed to attend the recent Pontypridd RFC sponsors networking evening and delivered what can only be described as an excellent talk on 5 Tactics to Boost Your Business and Your Profits. He kept the audience engaged throughout and the feedback from everyone was excellent. Rob is very knowledgeable on business and finance and on top of that is a genuine nice guy. We hope to have him back at a future event and I have no hesitation in recommending Rob’s services.
Rob delivered a series of 3 workshops aimed at understanding how finance houses look at finance propositions with the aim for us as a team to deliver more of a bespoke offering to our customer base. The training was delivered to a mixture of staff who work with new businesses start-ups and existing established businesses across Mid & South West Wales. Rob delivered the training with an abundance of passion and has really helped my team look at financial propositions in a different light, many thanks again Rob and I look forward to work with you in the near future.