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New research shows accountants are missing out on forming valuable client relationships with start-up companies, with just 19 per cent of businesses in the sector using an external accountant.
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Research reveals big opportunity for accountants
26 May 2015
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The Intuit Financial Fitness Startup Study, released last week, has revealed a number of industry trends that point to a great opportunity for accountants to help drive growth in these businesses, according to Nicollette Maury, Intuit Australia’s managing director.
According to the survey, less than 20 per cent of start-ups use an external accountant despite a majority demonstrating poor financial awareness. The study included a 'financial fitness test' which just 42 per cent of the start-up owners surveyed passed.
In addition, just 56 per cent of those surveyed identified that depreciation does not affect the cash position of the business while only 64 per cent knew that collecting receivables on time improves the short-term cash flow of a business.
Ms Maury said the results show that the start-up community needs financial guidance.
“There’s a really strong role for the accounting profession to play, not just in terms of compliance but also in terms of educating some of these start-up businesses in the basics of financial fitness,” she said.
According to Ms Maury, there are two main reasons why many start-up businesses do not engage external accountants.
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“One is that they run on the smell of an oily rag, and their perception is that it’s too expensive for them to be using an accountant... the opportunity here is to help them understand what the value is that the trusted adviser can [provide] in terms of helping to grow the business more quickly.
“The second is that often they don’t know what they don’t know… the opportunity here is for the accounting profession to play a stronger role in educating start-ups and new small business about some of the basics to help them get a picture of what they need to be learning in order to run an effective business.”
The same can be said, according to Ms Maury, about small business in general.
“It’s particularly concentrated in the start-up space, but certainly the small businesses that we talk to also experience challenges in managing their business finances,” she said.
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