SMEs want to be ‘challenged’ by accountants

Survey reveals what finance directors look for when selecting an accounting firm

SMEs want to be ‘challenged’ by accountants

The UK economy may have narrowly avoided the dreaded triple-dip recession, but it hasn’t stopped our nation’s SMEs keeping a very close eye on their purse strings. This appears to shine through from a rather revealing survey about what financial directors of our small- to medium-sized firms are looking for when selecting an accountant. Conducted by SKS Business Services, a firm of chartered accountants that provides a mix of shared services and UK based accounting services, the survey of over 100 SMEs in the oil and gas, biotechnology, manufacturing and service sectors found that 87% of finance directors wanted to be ‘challenged’ by an accounting firm. Indeed, one would be hard-pushed to dispute anyone claiming this is a positive outcome, as it shows SMEs are determined to display that they are maintaining a firm grip over their financials, and ensuring everything is well and truly in order. After all, this can be the difference between getting that all important bank loan, and heading down the treacherous road to economic ruin.

“To lend confidently banks need to know where a business is going and that it is being controlled properly, in other words that there is a proper management accounting information system in place,” explains Ian Herbert, deputy director at the Centre for Global Sourcing and Services and senior lecturer at Loughborough University School of Business and Economics. “Any lack of regular, objective, insight into the performance and prospects of a business means potential risk, and risks means higher interest rates, or worse still no funding at all.”

In terms of the other factors taking into consideration by SMEs when choosing their accountant, price unsurprisingly ranked fairly high, with only 53% of the finance directors surveyed saying that they would pay higher fees for better services.  However, over 70% of directors expect to get additional business advice on matters such as tax, budgeting and profitability as part of the service. They want a bit more for their buck, in other words. A further stat from the survey revealed that only 55% of respondents actively use monthly management accounts, which SKS suggests shows that many senior managers are making crucial business decisions without referring to regular real-time financial information.

Sanjay Swarup, director of SKS Business Services said: “It would seem that many companies are operating their accounting/finance function using traditional methods and expecting their accountants to come up with radical or magical solutions. SMEs are not using the latest technologies and access to global knowledge to provide clear, comprehensive and regular reports to help minimise cost and improve performance.”

Exploring those choice factors further, ‘trust’ proves another important trait for finance directors, but this seems to be based more on proficiency than building a close relationship with the accountant in question; 50% of respondents said that meeting with a senior accounting partner was of high or very high importance.  However, a large number of the SMEs surveyed did admit to feeling neglected by their accountants, or not important enough to get the proper attention they think they deserve. Either way though, it seems that keeping things as local as possible was imperative for the majority of directors, with 70% rejecting the notion of outsourcing or offshoring their accountancy service to another country, something which EB has written about this month. The responses were mainly based on preconceptions of offshoring rather than actual experience, as SMEs associated it with cultural and language barriers and a perception that it could lead to a loss of interaction and delivery problems. 

As if to reinforce the conclusion of our piece on how best to approach accounting services, Herbert added: “Until recently, the idea of shared services has been seen as a cost-play applicable only to large companies but, using the right expertise, at the right time, in the right way, it is important to any business.”

It pays to get it right, that’s for sure. 

Adam Pescod
Adam Pescod

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