Business needs financial management health checks says Geoffrey Robinson

Financial health checks for small firms should help improve their financial management skills and prospects for growth, says a Financial Management Working Group report launched today by Paymaster General Geoffrey Robinson.

The Group found that good financial management brought numerous advantages to small businesses, including better cash management and decision making, easier access to finance, improved profitability and reduced risk of failure. But many business owners/ managers were unaware of the limitations of their own skills.

Speaking at the launch of the Group's report, Geoffrey Robinson said:

"The Government is committed to removing barriers that hold back growth, enterprise and the development of dynamic businesses. Financial management is an important area where Government, working with the business community, can look to deliver real benefits.
"This Report is an important first step towards our goal of improving financial management across the small business community. There remains a great deal to do. The Report identifies areas of weakness and makes recommendations for tackling these weaknesses.
"We must take forward this agenda to make sure the improvement in financial management across this sector becomes a reality. I have asked Andrew Godfrey to take forward the Group's proposals to develop simple low cost financial health checks and to engage the Business Links organisation in their dissemination and use by small companies."

The Financial Management Working Group, which included representatives from banks, small business organisations, the accountancy profession and academia, the Treasury and DTI, were tasked to look into the concerns from industry and Government about the poor quality of financial managements skills among small firms.

Their recommendations build on existing initiatives and are designed to assess business financial management skills and requirements and recommend appropriate training. The Group also recommends that the Government and others play a key role in developing and, via Business Links, in signposting those checks.

Their Working Group, recognising the need to take account of the diversity of small firms, recommended that:

representative bodies, trade associations and service providers should raise awareness of the importance of good financial management;
a wide range of free/low cost Financial Health Checks be delivered, building on existing initiatives, and designed to assess a business' financial management skills and requirements and recommend appropriate training. The Government and others should play a key role in developing and, via Business Links, in signposting these checks;
Business Links, in participation with other providers, make available a free comprehensive local guide to financial management training, support and services;
professional accountancy bodies should provide relevant financial management training and best practice for their members and encourage them to provide more specialised services including financial management;
the accountancy bodies and Business Link Network Company continue to work closely together to promote more effective local cooperation between accountants and Business Links;
a thorough and independent evaluation of the role of formal mentor and non-executive director networks and search organisations, and that of the mentors they place in small firms, should be undertaken to establish their impact and examples of best practice;
the British Bankers Association should ensure that the evaluation of the Small Business Initiative is published;
the Management and Enterprise Training Organisation review the progress made on these recommendations every two years.

NOTES TO EDITORS

1. The Terms of Reference of the Financial Management Working Group were to examine the importance of financial management in smaller firms and to identify problem areas; identify the target market, taking account of firm size, sector and growth; examine

the effectiveness of existing initiatives and delivery mechanisms in improving the quality of financial management; and examine what further steps might be taken to improve financial management.

2. The Group Members included accountants Grant Thornton International, the Association of Chartered Certified Accountants, the Association of Independent Businesses, the Bank of England, Barclays Bank, the British Bankers' Association, the British Chambers of Commerce, the Chartered Institute of Management Accountants, the Confederation of British Industry, Durham University Business School, the Federation of Small Businesses, the Forum of Private Business, the Institute of Chartered Accountants in England and Wales, the Institute of Directors, Lloyds TSB, Midland Bank, National Westminster Bank, Riverside Consultants, ROMTEC, HM Treasury, and the Department of Trade and Industry.

Press Notices 1998 July to December Index