Monthly management accounts are essential to small businesses. The argument that monthly management accounts for sole traders (approximately 70% of all businesses), especially whose income is falling, is superfluous makes no sense. What it means is that monthly management accounts for sole traders should be relatively simple.
Regardless of whether business income is rising or falling, it is vital that at least once-a-month business owners review their financial position based on accurate data, whatever the size of their business.
Most businesses rely on accounting software, which is governed by GIGO (garbage in, garbage out – or – Good In and Good Out). The key to accurate time management information is a professional bookkeeper, registered with the Institute of Certified Bookkeepers. Employing a bookkeeper will save money in the long run, and short term:
- Accounting errors are very much more expensive to sort out, as opposed to “getting it right first time”.
- Professional bookkeepers reduce annual accounting and audit fees.
- Monthly management accounts will be
- timely (at the touch of a button, or at the end of an email)
- easy to produce
Vince Cable, as reported by Accountancy Age in its article ‘Cable backs monthly management accounts’, is right to make monthly management accounts an issue. He has come out in support of an initiative called ‘Doing Business Together’. This new organisations has allegedly over 30 active supporters, who all have a vested interest in the SME business sector.
These forums – business workshop discussion sessions – appear to have the support of:
- BIS – The Department for Business, Innovation and Skills
- BBA – The British Bankers’ Association
- DBT Subgroup Panel – Doing Business Together subgroup including high street banks, credit agencies, and credit risk specialists.
- HSBC and
- Dunn & Bradstreet,
- Euler Hermes,
- RK Harrison.
New rules implemented by the new Coalition government mean that all consultancy projects over a cost of £20,000 have to be signed off by a minister. According to Kevin Reed, of Accountancy Age magazine, these rules have stopped creating any new public sector consultancy work.
“This has effectively put an absolute halt to any big project being signed off. It has stopped things dead”. Reed
The new rules were drawn up after a belief by ministers that government spending on consultancy was too high. An official report released by office of Government Commerce stated that government departments and Quangos spent £1.5 billion on professional consultancy. The previous Budget stated that this figure was to half over the next period to only £650m.
The Government thinks consultants get too much work!
In response to the criticism by ministers, The Management Consultancy Agency (the representing body for consultants) have released a report into the value of consultants to the governments.
This shouldn’t affect the industry too much as any work lost through the public sector will be replaced by work in the growing productive part of the economy. Large firms which have expanded in recent years with the growth of public sector consultancy shouldn’t shrink. Mr Reed said:
“Consulting firms are not too large & I don’t see them holding back on recruitment”
It is still a rarity for me to stumble across incisive business insight, but I found a media business based in London WC2, preaching a powerful gospel on ‘media disorder’, namely Fishburn Hedges.
I think rhetoric about managing brands, brand reputation and brand messaging in a chaotic disorderly world strikes at the heart of marketing in a complex world today.
Google reputation is the new kid in town, and is rapidly becoming the main focus of many businesses who depend on the Internet for revenue (25%+).
Social Media has already transformed the commercial landscape, and Google is now responding which creates further complexity. At a recent leading Search Engine Marketing (SEM) and SEO conference in Las Vegas we heard experts suggest that (Facebook) ‘Likes’ are Links. This will require a major shift in online brand building strategies. Now blogs get rankings as prominently and as quickly as the major sites, further confirming that managing reputations has become disorderly. Facebook, Twitter, LinkedIn are some of the leading marketing platforms. UK Small and Medium Sized enterprises need to look for professional advice as ‘how to’ respond to the fast changing media landscape, which includes proper financial management controls preferably installed by a reputable chartered accountancy firm and ideally some form of business advice about the changing landscape of consumer behaviour from a marketing specialist.