SMEs risking profits by not investing in employees
Small- and medium-sized businesses are losing staff and money through failing to invest in their finance workers, a report by the Association of Accounting Technicians (AAT) has found.
The research reveals finance and accounting are largely overlooked when it comes to training, and many finance employees juggle financial responsibilities with their main role. Almost one in six (15%) never spend any money on training and a quarter (26%) only invest in ad hoc training rather than having a dedicated budget.
More than 60% of SME employees responsible for finance have another role, with half (50%) doing business development and sales and 34% having a role in office management. Three in five SME business owners (60%) are responsible for their company’s finances on a day-to-day basis, while only 26% of SMEs have one or more dedicated members of staff looking after finance or accounts.
As a result of not having qualified finance workers, AAT says every SME in the UK might have lost an average of £1,277 per year. These losses could include an average of £508 due to tax miscalculations, £399 lost due to an invoice not being issued and £257 for a payment bouncing.
Four in 10 SMEs have also experienced an employee leaving to join a bigger organisation with more training opportunities, costing SMEs a further £3,340 per employee.
Lindsey Dove, founder of SME Berry Cocoa Handmade Candles, said: “When you’re starting a new business you need every penny you can to help you get off the ground.
“To think that I may have been losing money during my first months due to my own lack of understanding of how to manage my finances is quite a scary thought. I could definitely have used that money starting up.”
However, nearly a quarter of small business owners said cost is a factor in staff not having a relevant qualification.
“Running a small business always involves juggling a lot of different priorities. With so much to think about, investing in a qualified member of staff to look after finance and accounting is often seen as a big step,” AAT chief executive Mark Farrar said.
“What’s worrying is that many business owners think that finance and accounting for their business isn’t complex enough to need a qualification, and that whoever looks after it can just learn on the job. Small businesses are often fragile, especially in their first few years, and every pound matters. Having qualified staff reduces the chances of losing money through issues such as late payment fines and incorrect invoices, making the business as profitable as possible.”