New research compiled by KPMG Small Business Accounting has found that outdated financial information is holding small businesses back from investment which would bring in an extra £1bn.
Revealing that the management accounts of small businesses are an average of four months out of date, KPMG Small Business Accounting believes those with accurate data grow twice as fast as those with information that is nine months-old.
Mental arithmetic and “rough calculations” are instead being relied upon by small business leaders, with 51 per cent approaching key decisions such as hiring by simply weighing up incoming and outgoing payments or glancing at the bank balance.
Bivek Sharma, head of KPMG Small Business Accounting, commented: “Running a growing business is a bumpy ride at the best of times, but having to make decisions based on what happened four months ago is a scary place to be.
“Great businesses are built on great decisions, but owners need to know where they stand today to make the right ones.”
Further findings from its survey of 1,000 small businesses across the UK revealed that 50 per cent of leaders are entirely self-taught in the finance space and 40 per cent prepare they own accounts.
KPMG Small Business Accounting suggested this results in the 40 per cent of bosses at small businesses who are concerned about financial uncertainty.
Sharma went on to say: “Business owners are making do with what they can get their hands on, and doing a fantastic job with it too. But an incomplete picture naturally creates uncertainty and means business owners are spending more time than they should have to trying to interpret their data.”
Ultimately, the survey concluded, outdated financial information is resulting in lower levels of investment, employment, productivity and general economic recovery among the nation’s small businesses.
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