SMEs don't know their numbers
Jan 21 2010
“SMEs lack financial planning”
Many small businesses admit to having poor financial management.
Some 45 per cent of SMEs in London say they do not have efficient systems to chase unpaid invoices, while 46 per cent are unaware of what their break-even point is, according to a poll from Business Link in London.
Matthew Perkins, senior advisor at Business Link in London, says: ‘Sound financial management should be the bread and butter of every business, especially during these tough economic times. As we head into the recovery period, understanding where your money is, following up your unpaid debts and knowing what your profit is, are vital to keep your business in the black and head for growth.’
The poll found that businesses employing up to ten people have the least processes in place to chase late payments, with only 50 per cent using structured systems to retrieve unpaid invoices compared to 72 per cent of larger SMEs.
Of the 350 small businesses polled, 49 per cent of the SMEs say they do not know their gross profit margin – a key indicator of business performance.
According to research from credit referencing agency Graydon UK, nearly two-thirds of small businesses have a bad credit score.