Clearly, Vince Cable has looked at the list of organisations backing the Doing Business Together initiative, as described in yesterday’s Accountancy Age story, and jumped on the “I’m all for the SME monthly management accounts” bandwagon.
Judging by visitors’ comments, and the views I have heard from accountants when talking about the pros and cons of greater financial transparency, it’s far from clear whether the majority of accountants are queuing up to join Vince on board.
In an article in the Mail on Sunday last weekend, accountancy firm Shelley Stock Hutter was recommending SMEs give management account information to credit agencies such as Graydon and D&B in order to get a better credit rating, but other accountancy firms take a completely different line on this one.
As I’ve said before, if credit granters don’t have enough information to make a decision, they will generally say “no” when economic circumstances are far from healthy.
I take a very pragmatic view on this: basically, if you’re an SME and a) you’re doing OK, and b) you’re trading in an area of business where you are buying and selling on credit terms, I would advise you to seriously think about becoming more financially transparent, as Vince Cable is suggesting. If you’re finding trading conditions difficult at present, or you’re the type of business that doesn’t have the need for a good credit rating, the benefits of producing management accounts each month may be more limited. In my humble opinion, it’s a simple case of horses for courses.
Martin Williams is managing director of Graydon UK. This blog was first published by Accountancyage.com