Many Small Manufacturers Are Struggling To Keep Their Finances Under Control
A significant number of small and medium-sized enterprises (SMEs) in the manufacturing sector are throwing away huge sums of money because of poor organisation – according to new research.
New research published by finance software provider Exact showed nearly one in four small firms in the UK have lost out because they have forgotten to issue an invoice to customers.
Around 41 per cent of the survey respondents said they have failed to obtain payment for work or services that cost between £1,000 and £5,000, while 12 per cent have let a bill of £10,000 or more go unpaid.
Almost one in three SME manufacturers confirmed finances were their biggest cause of stress, with many having issues relating to cashflow, debtors and business planning.
The study found 29 per cent of companies admit they have not got a tight hold on their corporate finances.
While businesses may think one or two missed payments will not cause any harm, Exact revealed that SMEs are collectively £3.7 billion out of pocket.
The government recently proposed new legal reforms to reduce the administrative burden on SMEs and it is clear from these findings that many firms are in urgent need of support.
Hartmut Wagner, managing director of Cloud Solution Exact, said: "We don't want to blow this issue out of proportion, but these findings do highlight that many SMEs working in the manufacturing sector who are eager to grow are not doing themselves any favours by losing out unnecessarily on millions in revenue income, particularly with so many expressing concern over their cash-flow."
The research also indicated that more SMEs are turning to third-party organisations to get their finances in order.
In fact, 54 per cent of firms said they trust their accountant more than anyone else, including their own business partners.
However, levels of communication between SMEs and accountants are still relatively poor, as 61 per cent of financial experts confirmed they speak to their clients no more than once a month.
Expert Opinion
SMEs are key to the overall success of the economy and it is essential that they maintain the right levels of cashflow to ensure that they can continue to operate and grow. <br/> <br/>“Small and medium-sized enterprises are certainly aware of the importance of invoicing accurately and on time, and I think these statistics point to the sheer amount of time-consuming red tape that SMEs have to deal with, rather than them being disorganised. Much of the stress that SMEs deal with in terms of their financial arrangement is to do with late payment from their customers and it is here where company bosses can take proactive steps to deal with the problem and also where they can get value from using an external adviser.” <br/> Steven Beahan - Partner