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More than half of SMEs go bust in their first five years due to poor financial management and admin

Written by Latifa Yedroudj on Monday, 03 February 2020. Posted in Financial management, Finance

Adrian Blair, CEO of Receipt Bank, explains why getting your finances in check is essential

More than half of SMEs go bust in their first five years due to poor financial management and admin

Through digitising financial data, SMEs can save time on manually sorting through receipts and invoices, increasing efficiency and allowing their business to thrive, Mr Blair said

The first five years of kickstarting a company is the most vital period that determines whether a business can truly sink or swim. However, many go bust early on due to internal issues or external factors beyond control, such as a changing political landscape, business policies and a fluctuating economy. However, what can companies do internally to ensure smooth operations and achieve long-term success? Adrian Blair, CEO of Receipt Bank, believes poor admin and financial management are one of the top reasons UK SMEs go bust early on. Business owners spend an average of 120 hours a year sorting financial admin while one in three businesses put off paperwork to the last minute, data by Receipt Bank has found.

“If you get the right data in, you’ll get the right data out,” Mr Blair said. “If paperwork is disorganised or missing, there’s every chance you’re missing a clear view of your finances and may face a nasty surprise down the line - one that could be the difference between sinking or swimming. On the flipside, I think that if you get your accounting right early on, scaling your business becomes a real possibility.”

Mr Blair has had a riveting career as the ex-Global COO of JustEat, with leadership positions at Google, Spotify and Ask Jeeves. Through his astounding experience at some of the world’s top companies, Mr Blair had an inkling to venture into small business that filled a gap in the market and came up with innovative ways to solve real-life problems – which led him to join Receipt Bank in 2019 as the new CEO.

“I learnt to proactively look for businesses that solve real-life problems - ideally ones that you relate to on a personal level - and to be positive,” Mr Blair said. “Just Eat, Google and Spotify all shared a fundamental optimism about the future of small businesses, work and technology. They saw it as an evolution rather than a revolution.”

One in three small businesses leave their financial admin to the last minute, and business owners take approximately 120 hours a year manually entering data, according to statistics from Receipt Bank who interviewed around 500 British business owners.

“The numbers say it all,” Mr Blair added. “We asked around 500 British business owners about their relationship with tax last year and found that poor financial management is a huge issue. One in three businesses put off their financial admin to the last minute, and one in five don’t process all of their tax-deductible paperwork. All in all, business-owners spend an average of three working weeks (120 hours) each finding and filing financial paperwork. Just over half (56%) feel that financial admin is holding them back from focusing on their business.”

With Receipt Bank, businesses can digitise their data and keep track of expenses much more easily, increasing their efficiency and ensuring smoother operations in the long-run.

“Bookkeeping is one of the oldest professional disciplines, but it’s also one of the last few areas of business to be digitised,” Mr Blair said. “Even now, we know that millions of small business owners are still driving shoeboxes of receipts to their accountant’s office, and many accountants are spending hundreds of hours a year manually entering data. It’s really no different to having a pile of paper menus in the kitchen drawer.

“We’re levelling the playing field for financial advice - small businesses deserve the best financial advice to succeed, supported by technology that works for them. If we can give people an easy way to keep track of expenses and get connected with an expert advisor, that’s empowering both the business-owner and their accountant or bookkeeper. Receipt Bank is really a business like no other.”

Receipt Bank is a digital bookkeeping service that allows businesses to take back control of their finance through “people-centred” technology, fetching financial information from multiple sources and improving the productivity of accounts and bookkeepers, helping businesses save time and money.

“We save businesses time and money on their taxes and give them control back over their books through people-centred technology,” Mr Blair said. “Our proprietary machine learning technology fetches financial information from multiple sources, digitises and categorises it, dramatically improving the productivity of accountants and bookkeepers, more than 50,000 of whom use the platform. The platform processes and stores 45 new fields of small business financial data every second from receipts, bank accounts, invoices and bills.

“Receipt Bank puts them - accountants and bookkeepers - into the driving seat for their clients. Real-time data views and productivity metrics gives them confidence and control, and saves them time and money, allowing them to become the trusted advisors they trained to be.”

Instead of keeping manual copies of their bank statements, receipts and invoices, businesses can simply snap a photo of their documents using the Receipt Bank app, email an invoice or fetch online invoices from suppliers. This then goes straight into an online archive that can be easily searched, managed and connected to a general ledger to publish transactions.

“In many ways, the biggest pain-point for accountants and small businesses is assembling the books in the first place,” Mr Blair said. “That means collecting information, compiling it from a variety of sources, transcribing that information and digitising it if it isn’t already digitised. Having an advisor by your side will help you correctly categorise expenses so you’re not paying any more tax than necessary, plus provide expert advice on growing your business. They’ll have seen it all before so you can gain from their years of experience, while dodging the lessons others have learned the hard way.”

Employing a team of 500 members of staff to run its operations, Receipt Bank is now used by over 360,000 businesses worldwide across 80 countries, including companies in the US, Europe, Australia and Canada. Receipt Bank has recently secured a US$73 million funding round this month to extend the range of products improve their services even further.

Mr Blair has advised SMEs to ensure they have enough accurate data and a clear view of their cash flow and forecasts, which is vital in ensuring continued growth and meeting profit margins.

“To improve growth, maximise profitability and value, make sure you have enough accurate data to make better decisions,” Mr Blair added. “A clearer view of your cash flow, forecasting and finances will help with everything from hiring to your office location, and offer support if you’re unsure about your next move.”

It is important SMEs ensure their financial data and admin are managed effectively. Getting your accounting right early on sets the tone for the future of your company, ensuring smoother operations down the line and the possibility of scaling your business up even further.



 

About the Author

Latifa Yedroudj

Latifa Yedroudj

Latifa Yedroudj has joined the Elite team to fully immerse herself in the business side of journalism, a strong passion of hers cultivated from young having co-run her mother's start up business since she was 18. Her interests lie in a wide range of subjects, including start ups, business, travel, and anything entrepreneurial she can get her hands on. She has worked for some of the biggest names in journalism including The Guardian and The Mirror. Follow her on @latifayed on Twitter for her latest journo rants.

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