Thousands of small business owners have no idea how much money they have in the bank

THOUSANDS of small business owners have no idea how much money they have in the bank – as one in six claim they are too busy to keep up with the amounts going in and out.

Another quarter feel that having a rough idea, but not exact figures, is fine when it comes to managing the day-to-day cash flow.

The study of 500 UK SME owners found 26% struggle with financial admin, and 38 per cent cite rising costs as their biggest challenge.

Nearly six in 10 (58%) operate from week-to-week rather than planning for long-term sustainability.

And 29% don’t know where to begin in terms of advertising their business and one in four struggle to balance growth with product quality.

A spokesman for accounting platform Dext, which commissioned the research, said: "It's no secret that SME owners put in long hours to keep their business thriving, but these findings demonstrate a real cry for help with financial admin that we know many businesses struggle with.

“Our research found there are a lot of gaps in business owners’ financial knowledge. 

"Businesses rely on a solid cash flow to stay solvent, so it’s critical for SME owners to either get on top of this themselves – or hire people who can do it.”

Of those business owners who believe they get by week-to-week, 40% said it’s simply because they don’t have experience in wider planning.

More than a third would like to employ the services of an accountant or bookkeeper, and 41% are stretched too thin by other business demands.

As a result, 61% of those polled wish they had more time to strategise about their business goals with a professional.

Fortunately, despite the lack of planning, 77% of respondents describe their business as being ‘reasonably healthy’ – with 27% of these claiming theirs is ‘very healthy’.

Respondents also admit they are sometimes their own worst enemy, as six in 10 feel ‘too proud’ to ask for help with their business.

But 84% admit they rely on the staff they employ to keep the business running effectively, according to the OnePoll.com data.

One in three SME owners do currently employ an accountant for their business, with the same amount saying they ‘could not do without’ their services.

It also emerged that 39% say their accountant keeps them in line with local tax filings – with 47% relying on theirs to ensure they pay the right amount of tax.

Another 26% lean on their accountants to spot areas their business can save money, and a further quarter use them for fraud detection – and prevention.

Dext spokesperson added: “Our results clearly show the benefits of having a dedicated accountant or bookkeeper for a business.

“As much as they can save cash – and make sure all your incomings and outgoings are above board – they can also offer huge peace of mind.

“It’s really one of those things where once you start to use one, you wonder how you ever got by before.”

12 THINGS ACCOUNTANTS HELP SME OWNERS WITH:

  1. Ensure you pay the right amount of tax
  2. To audit your business (legally)
  3. Ensure you comply with local tax filings
  4. To help you balance your business books
  5. To support your business financial planning
  6. Help you understand my business cashflow
  7. Help you understand the risk exposure of your business
  8. To provide you with tax simulation services
  9. Help you understand corporate governance
  10. Help you identify business savings
  11. Help you identify where you're reliant on a customer for revenue
  12. To detect or prevent fraud in your accounts

Despite not knowing things like exactly how much money is in the accounts, many business owners feel "more prepared than ever" post-pandemic.

But some put work ahead of well being, as another study reveals.

 

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