Insight Associates provide outsourced accounting and Finance Director services to ambitious and growing businesses. We work as your only resource or with existing staff to give you complete financial support including monthly management accounts, high level financial advice, robust controls and financial systems, funding and business planning, payroll & compliance, VAT returns and statutory compliance.

Successful business leaders have all the information they need to make good decisions…Do You?

Tuesday, October 16, 2012

In the Daily Telegraph today [16 October 2012]

Garry Mumford, Managing Director of Insight Associates, has an opinion piece published in the Daily Telegraph today (16 October 2012)

As part of a Business Turnaround supplement, Garry discusses the issues with businesses not getting a grip on their numbers ultimately leading to failure.

The article reads:

It’s common knowledge that a large percentage of the population are poor at managing their personal finances, so why do we expect anything different when those people go into business?

Their primary objective is to make money, yet many choose to ignore financial management because quite simply they don’t understand it. Something in their subconscious tells them that if they pay attention to the money; where it is; how it’s flowing; where it’s produced; and where it’s consumed; then they would have to act on it – and they really would rather not.

We witness the same pattern time and again in the distressed businesses we work with. The common thread is a lack of understanding of their financial position, no reliable accounting and financial information, and perhaps most importantly of all, no appreciation that the lack of this has contributed significantly to their failure.

From the outset, ‘doing the books’ is viewed as a burdensome task that must be done to satisfy the bank manager or to get the VAT return done rather than as a means to create useful information to aid decision making.  Accounting records are invariably way out of date, incomplete and of highly questionable quality.  

Often a low-paid bookkeeper is tasked to keep on top of the accounts but given no support.  An external accountant makes an occasional appearance, but never really has an understanding of the business, and produces historical score-keeping information, which is of no help to management.

If a business is to be successful it must think like a big, successful business. It is necessary to engage with competent professionals, perhaps through outsourcing, to ensure relevant, timely and high quality management information is available.

Armed with accurate information specifically tailored for the business, the management team will have a better understanding of their financial position and the ability to make informed decisions.  

Surely that sounds like a better solution than ignoring problems until the business fails and the only option is a turnaround (for the lucky ones)?

What is your experience?  Do give us your comments below.

The full supplement is available here, and our article here

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