IT-consultants: approximately 20 percent of SME uses Balanced Score Cards

28 August 2012 Consultancy.uk

Less that 20% of mid-sized organizations are using Balanced Scorecards for performance measurement. This can be concluded from an investigation by Source for Consulting and software firm Advanced Business Solutions. They interviewed 21 IT consultants that gained experience together at over 500 medium-sized organizations.

Clear value added

Based on the consultants' experience, it was highlighted that less than 20% of the 500+ organizations they have worked with use Balanced Scorecards - also known as Dashboards - in some way. Interestingly, the MKB firms do acknowledge the value added. Over 70% of those surveyed identified that the main benefit of a well-implemented Balanced Scorecard approach is the alignment of the senior management team. The second and third most important benefits highlighted by respondents is the positive impact that Scorecards have on an organization's ability to track progress towards agreed goals and the clarity they provide throughout the organization on what needs to be done.

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Barriers to using Balanced Scorecards

The research identifies that the key barrier to implementation of Balanced Scorecards is the lack of a clear owner or champion for the project - over 40% of respondents highlighted this as an issue. Another key barrier is an organizational culture that doesn't support analysis and objective decision making.

Fiona Czerniawska from Source for Consulting: "Starting down the Balanced Scorecard route may seem a challenging journey, however it does not have to be costly and disruptive to the business. By considering the key elements of success from engaging senior management through to harnessing the right technology, a Balanced Scorecard approach can be implemented effectively, providing mid-sized organizations with valuable performance insight."

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Late payment culture cripples productivity of SMEs

29 March 2019 Consultancy.uk

UK SMEs are seeing their efforts to grow stifled by late payments, causing thousands to enter insolvency proceedings each year. According to experts from Duff & Phelps, this also has a major impact on the UK’s economy, meaning late payment culture must be tackled if the country is to dodge yet more economic stagnation in the shadow of Brexit.

Small and mid-sized enterprises in the UK face a myriad of pressures at present. Brexit anxieties are keenly felt by SMEs, with more than nine in 10 suggesting recently that economic conditions have worsened in the last 12 months. 66% of SME leaders also expect conditions to further worsen in the coming year.

At the same time, firms are keen to see value for money from investing in external expertise. Consulting fees which weight much more heavily on smaller firms, who spend £60 billion per year on professional services, but feel that more than £12 billion of that figure is wasted on unnecessary or bad advice.

Late payment culture cripples productivity of SMEs

Above all, however, SMEs are extremely vulnerable to late payments, and, according to a new study, the situation is only getting worse at present. According to corporate rescue consultancy Duff & Phelps, small businesses in the UK are facing a collective bill of £6.7 billion per annum due to late payments by other companies, while the average value of each late payment now stands at £6,142. This has risen from £2.6 billion in 2017, illustrating the plight of SMEs, particularly with uncertain economic times ahead.

Indeed, the spike in late payments has already caused significant productivity issues for SMEs, which in turn compromises their financial stability. With staff wasting hours chasing down late payments and businesses becoming preoccupied with short-term cash flow problems, they are less able to concentrate on creating new value for the firm, which in many cases gradually slides toward insolvency.

Small businesses across the UK are facing major cash flow pressure, leading to increased financial instability as a direct result of a late payments culture. This is likely a big driver of the UK’s 20% boom in insolvencies over the last three years, especially as it has a knock-on effect on other SMEs within the supply chain of those struggling firms. Approximately 50,000 small businesses fail each year because of late payments, amounting to a shortfall of more than £2.5 billion for the UK economy. 

Commenting on the findings, Paul Williams, Managing Director, Duff & Phelps, said, “In this modern era of technology, which is designed to enable business agility, late payments are particularly galling as there are no excuses. The day of the ‘cheque is in the post’ is long over!... More can be done to avoid businesses reaching this situation in the first place. SMEs underpin the economy, so prioritising timely payments will help allow business owners to focus their time and energy on providing good quality products and services and adding value to the customer experience, rather than chasing outstanding payments.”

The UK Government currently promotes its voluntary Prompt Payment Code to encourage good practice, but late payments by larger companies remain a common pain point for many SMEs. There may be hope for an end to late payments, however, following an announcement in the Spring Statement from Chancellor Philip Hammond. The Government aims to crack down on the practice, with Hammond stating big companies should hire a Non-Executive Director to be responsible for reducing late payments to small suppliers. The statement also advises that organizations publish payment practices in their annual reports.