New research from AAT has revealed that more than a third of people responsible for finances in small and medium businesses (SMEs) do not have a relevant qualification. As a result of not having qualified finance staff, every SME in the UK could have lost an average of £1,277 due to issues such as tax miscalculations, unpaid invoices and fines – the equivalent of almost £2.9 billion across the UK economy. The figures highlight the ‘silent risk’ of SMEs losing money, and encourage them to think about qualifications for their accounting and finance staff.
Losses include an average of:
- £508 due to tax miscalculations
- £399 lost due to an invoice not being issued
- £257 for a payment bouncing
The research showed that in SMEs where staff have to cover a number of roles, finance and accountancy tasks are often being shared between staff that do not have the qualifications to ensure they are done correctly. Three in five small and medium business owners are responsible for their company’s finances on a day-to-day basis, putting an extra strain on their time. In comparison, only 26% of SMEs have one or more dedicated members of staff looking after finance or accounts.
The research also uncovered a gap in small businesses training their staff. Nearly one in six never spend any money on training and 26% only spend money on training ‘ad hoc’ rather than having a dedicated budget. For those with a training budget, this consists of an average £1,739 per year – dropping to just £603 for micro-businesses.
Lindsey Dove, launched her business Berry Cocoa Handmade Candles from home and runs her business with the help of an AAT qualification. She 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! I started the business with only £200 but because I had the knowledge of budgeting and costing abilities, I have turned that small amount into a surprisingly popular and profitable business.
“Since taking up an AAT qualification I feel more confident in my abilities to manage my business’s finances and business has certainly blossomed since doing so. As a business owner you are responsible for the success of your company, so if you want to succeed you need the knowledge on how to control your finances.”
Author: The youngest (and probably the coolest) member of the content team. Flaka is the Editorial Assistant and all-round writer, interviewer and helpmate for the AT magazine.
AAT short courses for business people without an accounting background start at £150.
AAT Comment offers news and opinion on the world of business and finance from the Association of Accounting Technicians.