Outsourcing financial management may be a game changer for SMEs’

Many small businesses in Nigeria have been reported to fail owing to challenges ranging from a strenuous oper­ating environment, to difficulty in man­aging complexities of their businesses which results in a constant struggle to combine managing day-to-day office activities with chasing new businesses. The Nigerian Association of Small and Medium Enterprises (NASME) in 2013 put the failure rate of new businesses in Nigeria at 65 per cent; getting moribund within the first three years in operation.

Good financial management is criti­cal to the success of any business, but it is particularly important in Small to Me­dium Enterprises (SMEs) where the risk of insolvency is often little more than an unpaid invoice away. A key concern for small business owner-managers is cash flow management, or more specifically the cash conversion cycle.

Experts express the view that finan­cial management for a small business encompasses more than keeping an accurate set of books and balancing business checking account, rather, encompasses management of finances to avoid overspending, being prepared for all expenditures, as well as profit distributions. Financial management responsibilities affect all aspects of a business, and it is said that a company that sells well but has poor financial management can fail.

Entrepreneurs have long seen out­sourcing as a strategy reserved for big business, but technology has made it a more accessible tool for small business­es–and for some small firms, outsourc­ing has made a powerful impact on their growth, productivity and bottom lines.

“Using amazing technology, it be­comes possible to provide bespoke ac­counting services to Small and Medium scale enterprises spanning across all sec­tors of the economy to deliver financial statements that provide useful, relevant information in a simplified, consistent, cost-effective way,” says Abimbola Bamigboye, Founder/Principal, The SME Champion & Co which runs the Audeo brand, a multi-disciplinary pro­fessional services firm.

Financial management, a key part of business which if not properly managed, could see businesses run into legal issues for example, in taxation, and could also see businesses shutting down owing to mismanagement.

In Nigeria, outsourcing financial management services is poised to en­able small businesses grow and a new addition to the sector is mall accountant which aims to help small businesses achieve optimum financial manage­ment.

Bamigboye tells BusinessDay “Audeo Mall Accountant is a new category for Accounting Services designed and developed by Audeo that allows us to be closer to our clients so that we can provide more focused services to them.

“The point is to provide Accounting and Tax Performance Services to busi­nesses situated inside shopping malls who are typically not owner managed and don’t have accountants or keep their books and following that, are not able to make more informed business decisions or get in trouble with Revenue for tax.

“By placing Accountant within the mall, those businesses have access to professional services at a fraction of the cost not to mention the assurance that their books are well kept, that they have access to performance initiatives, informed analyses and reporting for decision making and are educated and encouraged to be compliant as required,” says Bamgboye.

The importance of the type of out­sourcing service being targeted by Audeo is buttressed by Gregg Landers, director of growth management at CBIZ MHM, who says “for highly skilled, or executive, expertise, a business may not need to pay a CFO’s salary, but could have a CFO-level person to come in a few times each month to provide financial analysis and ensure that the bookkeeper is handling the books well.”

Bamigboye also says in outsourcing financial management functions, busi­nesses will “get a multi-disciplinary team of experienced professionally trained individuals who are passionate about small businesses for a fraction of the cost of retaining an in-house team full time, yet delivering better results.”