SME Businesses Still Trust Accountants For Advice

SME’s still prefer going to their accountants for advice rather than their bank, lawyer, business coach, or financial partner. This is according to MSI Global Alliance’s March 2011 survey of Australian small business owners. The advice taken predominately relates to business strategy and personal tax structures.

According to Charles Hornor, MSI Global Alliance spokesman, the result of the survey does not come as a surprise. What seems surprising for him is that accountants are also rated highly as a source of retirement advice. It is not an uncommon accounting practice for clients to be referred to their related financial advisers.

Accountants scored 37 per cent in the survey while banks only gained 10 per cent as a trusted source of retirement advice. Hornor says that banks should do better in order to gain better trust of clients.

But Nicholas Hossack, acting CEO of the Australian Bankers' Association, is quick to reply that banks are doing the best they can to cope with the competition. He added that “small businesses are important customers for banks and there is a lot of competition to win their business. Many banks have undertaken extensive advertising campaigns aimed at the small business sector and a number of banks have announced significant expansions in the hiring of business bankers. Compared to the height of the financial crisis, small businesses are now increasing their appetite for taking on new debt and banks are supplying the finance.”

According to ABA’s figures, banks reported strong lending records of $22.1 billion and $20.6 billion, respectively, in the June 2010 and September 2010 quarters.

It has been noted that during the financial crisis, banks charged higher interest rates to small business owners than to households.

“Banks must lend prudently. They must do this to comply with prudential and responsible lending regulations, as well as meeting commercial objectives for their shareholders. Capital required by the Australian Prudential Regulation Authority to be held by banks for small business loans is generally three times higher than for home loans, and can be seven times higher for some products,” Hossack said.

This may be true. But the fact remains that it is not an easy thing for small business owners.

News Source: SMH.com.au »