Press Release

New research from KashFlow - a new online tool to manage the accounts of small businesses - has found that almost half of micro businesses (49.8 per cent) manage their financial accounts manually, using only paper and pen.

Manually managing accounts is inefficient and time consuming. It is therefore unsurprising that one third of SMEs (33 per cent) feel that they spend too much time dealing with non-core business activities like paperwork, credit control, and statutory financial requirements.

Manual account management is also an inefficient and expensive way to pass a company’s accounts onto professional accountants, who must subsequently enter the data into their own accountancy system. Using a computerised system enables businesses to minimise the time it takes an accountant to produce end-of-year accounts, subsequently reducing the accountant’s fee.

Failure to institute proper accountancy practices and procedures has been found to lead to a lack of financial control within businesses resulting in cash flow difficulties. Poor financial management and planning contributes to the closure of 100,000 UK SMEs each year and up to 70 per cent of businesses in their first year of trading.

The most frequent reasons given for manually managing accounts included:

1. The ease of using a manual system

Respondents’ comments included:
“I want to keep it simple, as accounting is my downfall.”
“I bloody hate doing my accounts and this is the most painless way of doing it. Not very hi-tech though.”

2. Pressures of time and cost

Respondents’ comments included:
“I can't afford the time or money needed to use any of the computer programs I have looked at.”
“I am too busy with other things to be able to afford to dedicate time to learning a complex computer system.”

3. The complexity of accountancy software

Respondents’ comments included:
“I don't get on with accounting programs.”
“I took one look at Sage and ran away screaming!”

The research also found that owner managers who currently manage their accounts manually wanted a better, more efficient option.

Respondents’ comments included:

“We really need to use something more professional but all the available products seem to be
designed for full time bookkeepers/accountants. We are still looking!”

“I probably waste more time doing it this way than I would if I learnt something else - time to make
a change I think.”

KashFlow’s research found that of the 47.8 per cent of micro businesses that actually used a computer to manage their accounts, most used the spreadsheet program Microsoft Excel.

Only one in five micro businesses (20.88 per cent) use a software solution specifically designed for accounts management.

Reflecting on the findings, Duane Jackson from KashFlow said, “Providers of accountancy software must understand that owner managers aren’t accountants or necessarily skilled users of IT - and they don’t have the time to learn. Owner managers need a simple, jargon free, time-saving and hands-on accounting system.”

“Owner managers must find a way to manage their accounts and finances more effectively. Most regard keeping financial records as something they only do to keep their accountant and the taxman happy. The effective management of accounts and the ability to interpret and act on such business data has proved to be the difference between success and failure for many small businesses.”

KashFlow is an online tool specifically designed to help owner managers in small businesses manage their accounts. KashFlow keeps accounts management simple: it requires no installation, software training or prior knowledge of accountancy.

KashFlow can be accessed at www.kashflow.co.uk.

Survey results: