The Voice of P2P Automation from the Finance Process Gurus at PayStream Advisors.

Senior Managers of SMBs Unprepared for Fnancial Responsibility Expected of Them

Posted On February 13, 2013 by PayStream Advisors

Basware’s SMB Finance research reveals that 53 percent of small and 59 percent of medium sized business owners believe the responsibility for setting budgets, controlling payments and determining the company’s financial strategy lies with senior management, despite 1 in 3 senior managers admitting they are unprepared to take on the role.

The SMB Finance research surveyed 558 business owners and 1,368 employees with financial responsibility from small to medium enterprises to identify the financial processes and owners of responsibility within SMBs across the UK, US, Sweden, Germany and Belgium & Netherlands.

This research aims to inform SMBs of the challenges they face in growth, as well as educating business owners on the productivity levels of their employees as ‘small business processes’ reach breaking point. The findings also help businesses to understand the investment needed in people, processes and technologies as they move from ‘small’ to ‘medium’ and beyond.

The findings suggest that, with financial responsibility being handed down from owners to senior managers, a much greater understanding of the role is needed if they are to complete it successfully – 45 percent of senior managers have yet to receive formal financial training. Similarly, those higher up the organization ladder are unprepared to take on this responsibility – 57 percent of board members are untrained. The issue does not appear to be restricted to locality, with 28 percent in Europe and 33 percent in US wanting greater understanding of how to manage company money.

Conversely, with little structure in place within micro-businesses, business owners are much less likely to hold other members of their organization responsible for finances. Fifty-six percent of microbusiness owners state that nobody else within their company is expected to engage with financial processes, with board members (27%) and senior managers (17%) occasionally being trusted with finances.

Basware’s SMB Finance research indicates a greater need for simpler and more manageable processes that employees can engage with. In total, 34 percent of employees’ job descriptions in Europe and 31 percent in the US did not include reference to financial responsibility within the role. With an increasing diffusion of financial responsibility, a more holistic approach that allows all employees to engage with basic financial processes could prove beneficial for ensuring that financial activity is appropriately attended to.

Key findings from the SMB Finance research on controlling financial expenditure:

Company spend rules and regulations – 44% of organizations said that expenditure was controlled by departments and functions, compared to just 18% in the US
Strict rules on company spenders – 38% of employees say they are not allowed to spend company money, compared to just 3% of employees in the US
Desire for spend authority – 21% of employees in medium sized businesses say they would like authority to make purchases in their own field vs. 14% in small and 6% in micro

Basware’s SMB Finance research also gives an indication of SMB motivations in the current financial climate:

61% of organizations in Europe are currently prioritizing finding new business customers to support their growth, compared to 51% of US organizations
This motivation is particularly prevalent among micro-businesses (62% vs. 53% amongst medium sized businesses)
However, medium businesses are more worried about controlling their financial infrastructure, with 49% stating cost control (32% among micro-business) and 42% managing cash flow (18% among micro organizations) as a key challenge for their company

Click here to view the entire Basware press release.

Thanks for this incredible research Basware. PayStream is currently gearing up for its Q2 small to medium enterprises (SME) report titled Automating Payables for the SME Market. This report will focus on SME solution providers who have strong capabilities and product strategies to meet the needs of Account Payable departments. Check back in Q2 for this report. PayStream’s 2012 SME report is available in our Research Library.

Senior Managers of SMBs Unprepared for Fnancial Responsibility Expected of Them

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