Don’t Succumb to Poor Finance Management


Magic Accounts, a leading online accountancy service, is aiming to decrease the number of businesses in the UK which succumb to poor finance management and fail within their first few years of operation. It is a widely stated fact that the most common reason for small business failure is poor finance management, with the most commonly stated figure estimated to be 90% of start-ups failing as a result of their inability to manage finances. The fixed-fee accountancy service provided by Magic Accounts can help a business to become the master of their own finances, rather than being at their mercy.

Staggering figures recently released show that 48% of businesses have never run a cash flow forecast, and some don’t even know what a cash flow forecast is. In one fifth of these cases, the poor cash flow of these businesses meant that some of their staff members weren’t paid on time. Poor finance management and cash flow is suspected to be one of the reasons for stuttering SME growth in the UK right now, with around 25% of companies missing out on growth opportunities due to limited fund access.

Laurence Collins, Managing Director of Magic Accounts, says, “The statistics are worrying for all fledgling businesses in the UK right now; people who have no experience of managing finances are taking on the monumental task of starting their own businesses, and their inexperience in the field of finance is causing them to fail. Our fixed-fee online accountancy service can help them to take control of their finances rather than succumbing to them.”

A common misconception is that companies with poor cash flow are not making a profit. This is patently untrue; profitable companies succumb to insolvency regularly as a result of their inability to manage their own cash flow. Year-end accounts and balance sheets are irrelevant here; if there is not enough cash coming in to meet expenditure costs on a monthly basis, a business will fail.

Small business accountancy services can help with this management of cash flow. With their intimate knowledge of a company’s accounts, they can develop ideas and strategies that will facilitate steady and reliable cash flow throughout the year, rather than in fits and starts. A company will not suddenly ‘run out’ of money if they hire an expert accountancy service; their short term cash flow will be examined, as well as the cash flow for the next few quarters to ensure the future of the business in the middle-term. Long-term strategies regarding cash flow will also give businesses an idea of the prospects of their organisation in the coming years, including how much growth is possible for them in the future.