6 key myths and misconceptions
Each of the following myths and misconceptions relates to the finance function needs of SMEs. They’re very common, so don’t be disheartened if some feel uncomfortably familiar to you! Just remember that it’s always important to uncover the truth of the matter – because that’s what drives and transforms results.
Common belief #1
Bookkeeping is a low-value overhead cost – “it’s just simple admin”.
If you think like this, you’re likely to bring low-value, unskilled people into your business to handle the task. But the work will be inefficient and will ultimately undermine your ambition.
Because at a certain point in the growth of a business, bookkeeping actually needs to incorporate a far more in-depth element.
Common belief #2
I can get insightful management accounts at the click of a button.
No, you can’t. Management accounting is as much art as it is science. Most accounting software simply records cost of sales and sales based on transaction date alone, but that invariably leads to peaks and troughs of profit.
Producing a good set of management accounts requires human intervention and a specific skill set.
Common belief #3
Sales, profit & loss and cashflow forecasts are the same thing.
They are absolutely not. Each type of forecast has its own specific purpose in informing you about how your business is performing – and the everyday impacts of the overall direction of travel.
Common belief #4
All accountants are created equal.
This is another key misconception. All ‘accountants’ (that is, all ‘accounting professionals’) – and all accounting disciplines – are not the same.
Someone with a bookkeeping qualification will have learned how to ‘balance the books’. Your local accountant is specifically trained to check your financial records, and produce the VAT returns and formal year-end accounts that HMRC requires. A finance specialist who has devoted their career to producing insightful management accounts that inform and support optimal decision-making in the corporate world has a very different set of skills and expertise to bring to the table.
Common belief #5
Hiring a generalist finance person is all my business needs.
Fair enough. And, for a while, that really works. You hire one person, who can ‘do a bit of everything’ for your business as you’re getting established. It saves you money and you probably do get what you need. But there comes a point, as your business starts to grow, when you need specialist support – a bit of day-to-day input, a bit of operational expertise, but also a bit of strategic expertise.
Common belief #6
My business needs a full-time finance function.
No, also not true. What your business needs is specialist expertise for specialist requirements – but only when you need that particular type of input.
Very few businesses with a £1m-£5m turnover need a full-time finance function. Different people, part-time, is the way forward – it’s the smart, flexible, scalable solution to providing the support a growing business needs.
Now, what does your business need?
How do your own beliefs shape up against these 6 key myths and misconceptions?
Are you any clearer about the way forward for your business? Have you outgrown your accounting support over the years? Would some specialist support help you see a clearer picture of what is and isn’t working in your company? Want to find out what a financial controller might cost per month?
We’d love to speak with you about how the right finance professional for your specific business will save you money and make you money – not just handle the paperwork. If you’re curious, please don’t hesitate to get in touch for a free and confidential chat with one of our experts.
You can also download our ‘Know your numbers to grow your business’ report to dig into a little more detail.