ACCA: The finance function IS the company's growth driver - Director of Finance online
Financial know-how helps small businesses get loans, says biggest-ever survey of SME access to finance.
ACCA has said today that the development of the finance function is ‘a cause, not a consequence’ of SME growth.
The organisation also says small businesses applying for new funding are more likely to be successful if they have financially trained staff in charge of their finances.
The findings come in the latest edition of the quarterly SME Finance Monitor, produced by independent researchers BDRC Continental has revealed.
Manos Schizas, senior SME policy adviser at ACCA, welcomes the findings, saying:
‘It’s great to finally have the most robust evidence possible that developing a professional finance function makes it easier for SMEs to access the finance they need. We’ve been saying this for years, but then we would, wouldn’t we?’”
The Monitor is the definitive account of UK SMEs’ access to finance and with four waves of the survey now complete, and with more than 20,000 interviews with decision-makers in UK SMEs, it highlights the influences on bank and business behaviour.
ACCA’s analysis of the data reveals that producing regular management accounts helped SMEs access new funding.
On the basis of the first three waves of Monitor data, ACCA estimates that over one-third (34%) of all businesses with 1 to 9 employees have neither of these practices in place, while less than one in five (19%) have both.
Larger businesses and businesses with better external credit ratings were more likely to get new credit facilities.
However, SMEs were also more likely to succeed in their applications if they had managed to avoid major credit and cashflow issues - such as missing a loan payment, and if they and / or their owners had a track record of at least a year (owner-managers with over 15 years’ experience got a further bonus), and if they were not in the hotel and restaurant business.
ACCA has echoed this sentiment previously in a report called Driving SME growth through an evolving finance function.
This report drew on the first two waves of the Monitor in order to explain how and why businesses develop finance functions as they grow.
This research found that SMEs with a combination of formal business plans, regular management reporting and professionally trained staff were more likely to achieve fast growth without compromising their credit scores. This effect remained significant even after turnover and headcount were taken into account.
Manos Schizas explains:
“ACCA’s argument, based on careful modelling of the Finance Monitoring data, is that the development of the finance function is ‘a cause, not a consequence’ of SME growth. It begins as a tool for business planning pre-startup, then evolves into a set of rudimentary financial and management controls that align owner and staff incentives, then refocuses on enabling standardisation and monitoring of business processes.
“At the final stage of its development, an SME finance function adapts to the need for responsive growth by enabling businesses to access finance, assess the case for new products and services, monitor their supply chains and manage their headcount.”
Finance minister to meet with IMF reps - Jamaica Observer
MINISTER of Finance and Planning Dr Peter Phillips says he will soon be meeting with International Monetary Fund (IMF) representatives to discuss the timelines for the next phase of negotiations.
"With respect to the negotiations with the IMF, I expect, in the next few weeks, to visit Washington to determine with the Fund the timelines for the next phase of our negotiations in the light of this (2012/13) Budget (including the revenue package) and the other outstanding issues," he said.
Closing the 2012/13 Budget Debate in the House of Representatives yesterday, the finance minister said every effort was being being made to conclude the negotiations post-haste.
"While one cannot predict with certainty the exact timing of the conclusion of the negotiations, I am working to bring them to a conclusion later this year," Dr Phillips said.
He noted that the IMF board met on May 30 to review Jamaica's 2011 Article IV consultation, which, among other things, provides an insight into the issues that will be of concern to the IMF's Board when it is asked to consider approving a successor programme to the aborted Stand-By Arrangement.
The minister pointed out that the report on the Article IV consultation will be published both by the Fund and the his ministry as soon as it is cleared for release.
"The draft report we have seen contains no surprises to anyone who followed my analysis of our current situation. The Board discussion and conclusions focused on some of the very areas which we have emphasised, that is, the need to: boost growth and competitiveness; and enhance fiscal sustainability," the minister said.
Dr Phillips said the IMF board broadly agreed with the assessment that a strong upfront fiscal adjustment is necessary to place the public debt on a clear downward path and to create buffers to protect against further negative shocks.
"In this regard, the IMF board stressed the importance of tax reform, containing public wages and employment, improving public financial management, and strengthening tax administration as necessary underpinnings of the fiscal consolidation efforts," he said.
In the meantime, he said the Government will be making "unprece-dented efforts to correct the slippages of the past year and is moving steadfastly to put in place a tax policy that aims at equity.
"We also intend to implement a system for parliamentary review that allows all of the people's representatives to participate to a greater degree in monitoring the programme. Hopefully, this will enhance and entrench the objectives of the fiscal responsibility framework. A broad range of issues and details are involved in coming to an agreement with the IMF," he said.
The finance minister said some of the areas of key importance are: wage restraint; pension reform; tax reform, including incentives and waivers reform and improvement in tax administration; and competitiveness reform, reducing impediments to doing business and reducing significantly the cost of energy.
Forex: NZD/USD around 0.7700 ahead of Bernanke - FXStreet.com
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