Loughborough University’s Deputy Director of its Centre for Global Sourcing and Services, together with the Chartered Institute of Management Accountants and SKS Business Services, recently published a report entitled Accounting for Growth. The report explains that many SMEs think of their accounting function as just performing a ‘bean counting’ exercise, instead of encouraging management accounting techniques to support the business objectives.
Knowing About the Significance of the Numbers
When you are familiar with your accounting history, you should find it easier to look forward, meet challenges, and recognise opportunities that can be managed to your advantage. When you know what all the figures mean, they can help you make plans and set budgets, understand your risks and make more informed decisions.
Of course, all this takes skills and time that you may not have personally or within your own team. If you outsource your bookkeeping to an experienced and committed provider, you can focus your own efforts on your core business activities – as long as you get regular, accurate management reports and recommendations from the bookkeepers.
Just as we all know that the cost of living is rising for households, so it is obvious that general and administrative costs for businesses are going sky high. It has never been more important to find ways to drive revenue up and manage costs.
Catching up with the Major Players
Ian Herbert said that in recent years major companies have managed to reduce ‘back-office costs dramatically through the use of shared service centres and outsourcing (now) new solutions are now becoming available for smaller companies to mimic the more flexible sourcing strategies of the large companies.’ For example, if you have more than one location, or partners or staff out and about, you should be considering using the likes of Skype, join.me or Dropbox for communications and file sharing.
Whether you can take advantage of these and other more costly technological solutions depends to some extent on your finances. If you need to raise funds for acquiring new technology or investing in growth, having an accurate record of your business finances will help you put a good case to potential lenders or investors.
Peter Simons of CIMA said ‘The UK’s economic recovery is dependent on the SME sector, but many smaller companies could be performing below their potential because they are not making full use of their finance professionals’. So be sure you are making full use of your outsourced bookkeepers. The time taken to discuss the reports you need and how to use them could bring huge rewards.