Archives For complete finance professional

SMEs

By Mark Gold, chairman of ACCA’s Global Forum for SMEs

I gave a keynote speech at the SME/SMP forum held by ACCA Uganda, in Kampala, recently.

As the chair of ACCA’s global forum for SMEs, I know that small businesses are critical about global growth because they feel there are many obstacles in their paths, such as lack of finances; absence of trusted advice in overseas markets; and scepticism of the unknown.

My speech was about these key issues and how this business sector is much more likely to use an accountant, because the advice they get from their accountants is the most trustworthy of sources.

ACCA has launched two campaigns in the past year to try and allay some of these concerns – public value and the complete finance professional. Both aim to show the wider public, including businesses, just how dependable the accountancy profession, specifically ACCA qualified accountants, is.

Due to the continuing global economic crisis, it has been hard for small businesses to find the funds to aid global growth during its time of need.

Banks are also being cautious with their money and so are not lending as much to SMEs, which fuels financial hardship for small businesses.

Accountants need to be on hand to advise those who seek it, before any “crisis” arises, not just when a problem has occurred. Problems need to be stopped in their paths before they develop into bigger problems.

Charles Ocici, executive director of Enterprise Uganda, came up with solutions for accountants and SMEs alike:

  • Cultivate the culture of taking professional advice FIRST, not only when there is a problem, or when they need a loan!
  • Offer solutions in a phased manner – if you gave a baby ten injections all in the same spot on the same day you kill it!
  • Use a language easily understood by your client
  • Take time to get into the guarded space of the entrepreneur to secure their trust.
  • Keep professional distance to be respected
  • Systems run the business – but people run the systems, so check how professional are your OWN internal and external team.
  • Price is not the main reason customers leave
  • An increase of 2% of sales equals a drop of 10% in costs.

We also had a panel discussion about why small business will not use small and medium practices (SMPs)

  • Taxes – they don’t want to register and risk having to back and regulate and pay for previous years.
  • Costs
  • Non-disclosure – cutting corners and don’t want transparency
  • So many fake accountants

There is concern over finding legitimate accountants, but the best way to check their credentials is to search for them on the internet and ensure they are ACCA approved, or contact the ACCA national office in the country you live in and they’ll be able to help you.

SMEs must include in their investment strategies good financial advice. It is key to investments and without it, decisions will not be made properly without the necessary guidance.

There should also be government support for SMEs to help them become competitive.

There is a need to educate small businesses that accountants are needed throughout their business lives, not just to get things going or to resolve any issues that may occur along the way.

SMEs are at the heart of our global economy, they have helped greatly in restarting the economy where national, and even global organisations, couldn’t.

Accountants and small businesses need to work together to keep things going. They are vital assets to the economy.

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By Jamie Lyon, head of corporate sector, ACCA

Reading a lot of the commentary on finance and the role of today’s CFO you’d be forgiven for thinking that today’s finance function spends all of its time on strategy formulation and execution. I don’t doubt for one second how important the role of finance as a strategic business partner to the organisation is, or the critical role progressive CFOs increasingly play in strategic support to the organisation. But it is also worth remembering the role the finance organisation plays in what I would call the fundamentals – cost management, cash-flow management, finance operations and so on. There are of course differences and changes in priorities – the strategy of the business, the prevailing state of the economy, its industry sector – are naturally factors which shape and influence the focus of finance leaders and the function at any given time. But it seems irrational to think that great finance functions are still not held to account on the strength of control and financial management of the organisation. This indeed is at the core of its fiduciary responsibilities. It’s also critical to get this right if you truly aspire to supporting the strategic agenda of the business – these multiple aims of the finance organisation are not mutually exclusive. Having this bedrock of broad finance capability is also, of course, particularly relevant in a period of on-going volatility and growth challenges.

We recently produced a report examining the future needs of the finance function, and the implications for developing the capabilities needed. The report, the complete finance professional, draws on a wide range of studies, including ACCA research specifically with CFOs and other finance leaders, to test these ideas out. The conclusions were very simple. Great finance functions needs to be able to draw on a wide range of finance capabilities. They can’t survive on staffing their functions with people schooled on a narrow version of management accounting, and this isn’t particularly healthy for developing the capabilities needed in future finance leaders either. Let’s consider the roles some finance professionals perform to illustrate the point – can financial analysts drive truly effective decision-making if they don’t have a broader understanding of risk; can internal auditors perform their roles effectively without a strong grounding across financial and management accounting disciplines; can accountants with investment appraisal responsibilities get by with no awareness of tax, or regulatory changes which may have implications on project benefits…and so on. I don’t quite think so.

Secondly, with public debt, currency instability, emerging market growth, commodity price rises and many other signs of significant volatility, finance leaders themselves are in a huge period of flux, change and uncertainty; we know the role of CFOs continues to evolve but it’s the shear breadth of skills and knowledge that is now called into play; also given the level of volatility in the global economy we see a real call out to balance the quest for growth with the need for control – this ‘balanced finance leadership’ really is as a hallmark of the top finance job right now. The report also comes to other simple conclusions – a recognition that the changing face of finance operations with the advent of shared services, outsourcing, centres of excellence and the retained organisation demands both excellence in traditional finance capabilities (e.g. process mastery, transparency in controls, specialised finance expertise) as well as new capabilities (transformation, project management, dealing with change, customer centricity and so on); and that strong finance functions earn the partnering mandate best by ensuring effective finance stewardship of the organisation as a strong foundation; in short you can’t neglect one for the other, it doesn’t quite work like that.

At ACCA we continue to advocate the need for breadth and depth of financial understanding in finance functions today.