Total Financial Managements for SMEs


3 Dimensions know that establishing and managing a small or medium sized enterprise(SME) is a significant investment of  your time and money, it is your livelihood. The success of your business predominantly  rests with:

 ·  Management skills

 ·  Product or service expertise

 ·  Experience

 ·  Market knowledge

 ·  Dedication to customer service.

You need to find the right balance between  working both on the business and in the business.

As Chartered Accountants, 3 Dimensions play a vital role in relation to SMEs. We are pre-eminently qualified to provide independent, leading-edge business advice to our clients. We provide a vital source of the additional business, managerial and financial skills frequently needed by SMEs.

Inadequate planning causes many SMEs to fail due to not addressing one or more of the following factors:

 ·   Depletion of cash resources

 ·   Poor management

 ·   Inadequate understanding of finance

 ·   Poor understanding of cash and accrual accounting

 ·   Too much reliance on debt financing

 ·   Investing in non-core activities or non-profitable products

 ·   Over capitalisation of fixed assets

 ·   Insufficient attention to research and development

 ·   Ignoring the market place

 ·   Introduction of  direct competition locally or imported

3 Dimensions offer their expertise as Outsourced Financial Controllers to partner the business through many of the financial management issues confronted.

The term Outsourced Financial Controller is used to incorporate the range of accounting and financial functions including financial analyses for decision-making, accounting recording and reporting, taxation advice and financing of the business.  The utilisation of an Outsourced Financial Controller in small to medium sized businesses is warranted until they mature sufficiently to perceive the need for expert in-house financial advice to supplement the executive management team. As smaller businesses are encouraged to grow and become more professionalised, it is recognised that they will not be able to rely solely on internal talent and will need to integrate external expertise into the business.

3 Dimensions’ role often extends beyond the financial role because of the strong interconnection between financial issues business-specific matters such as succession planning.  Competing capital demands predominate in businesses, where stakeholder forces and personal constraints operate to influence shareholder liquidity at the same time as business demands and capital market constraints determine capital needs

Roles that 3 Dimensions is often encouraged to play include:

Ø          Diagnosis. In this role the 3 Dimensions plays a part in a frank assessment of historical financial performance and future scenario planning.

Ø          Cash management . Liquidity is an important concern in business with advice being required from both the stakeholder and the business perspective. Management reporting systems play a key role in cash flow management and 3 Dimensions will implement these systems, as we have for a number of our clients.

Ø       Corporate finance 3 Dimensions can provide significant support in analysing expansion plans, acquisition targets and divestments. In addition we can advise on the best forms of external finance.

Ø         Succession planning . This role could be played by other professionals, such as human resource advisers, lawyers and general business advisers. However, there are usually important financial issues, including longer-term financial plans and taxation implications, which need to be factored into the succession planning process

Ø          Remuneration advice. It is argued that this may involve setting policy to ensure that employment and remuneration are linked to performance not ownership positions

Critical to the performance of the external adviser is the ability to separate the business from the stakeholders/family. 3 Dimensions strongly argue that the external adviser should, without forsaking their disciplinary strength, adopt a process consulting approach to provide broad and relevant advice.

The importance of increasing the value of the business, achieving growth, and accumulating stakeholder wealth is ultimately the objective of both the stakeholders and 3 Dimensions.

A common scenario confronted by 3 Dimensions, in its capacity as an Outsourced Financial Controller, is to assess the ability of the business to achieve growth to the extent to which they could source finance. This would result in inquiries about how the business utilised budgets and the overall effectiveness and timeliness of management reporting systems. 3 Dimensions have successfully implemented management reporting systems to address information needs of the external financiers and the management team in the appreciation that with most SMEs, especially family businesses, equity was said to be limited to the ability of a few individuals and the unwillingness of unrelated parties to take the financial risk. Therefore, the reliance on the banking sector to finance SMEs will always be high.

In many cases 3 Dimensions consider the banks to be central to financial planning and infrastructure developments. However, as with any other supplier, the banks have to be competitive and deliver on customer service. SMEs, on average, are moving banks every five years. With the equity of the business being heavily focused on the family owners and any risk to be taken also borne by them, it is no wonder that sourcing of finance is seen as an important activity undertaken by the Financial Controller and that banking facilities best fit the needs of the business from a day-to-day operational viewpoint and within the strategic planning elements of the business.

As businesses become more professional in their approach to management they are likely to create a financial management role within or outside the business. Research shows that importance is attached to getting the right skills and qualifications for this important role, rather than allocating the responsibilities internally. When appointed, the Financial Controller is usually an active member of the executive team. The presence of a Financial Controller is usually linked to the existence of an active management team that encourages regular financial reporting and input to management decisions.

3 Dimensions can tailor our involvement as your Outsourced Financial Controller that will deliver a very cost effective service accessing highly qualified financial expertise and the full breadth of our suite of services. Compare paying $100,000 to $150,000 for a full-time Financial Controller, when the role of the Financial Controller, given the size and resources available to the business at this point in time, does not justify a full-time position. It makes economic sense to outsource this role at a fraction of the cost and have access to these skills as and when required.