A poll of almost 300 business leaders by MGI Australasia – a network of independent business accountants and advisers – found a sizable gap between what business owners want to know and their ability to identify this information, which it claimed is a “major hindrance” to long-term success, both for the business and themselves personally.
MGI, through its My Catalyst benchmark tool, found that for Australian and New Zealand business owners, a difficulty to track financial performance and a lack of understanding in what their data actually means are the main reasons contributing to this information black hole.
And where the business owner can find and interpret their data, they are only able to access old information that has become obsolete.
MGI’s executive chairman Lorin Joyce called the findings “alarming”.
He said that businesses need to be able to effectively monitor their financial performance, and to see where improvements can be made.
Chief among the concerns is cash flow, where “poor internal processes and management of working capital” are creating stress on at least 25 per cent of businesses.
This was supported by the research, which revealed that a third of businesses have “debtor days” of more than 60 days, and close to half of all firms are holding onto stock for more than 90 days before invoices are issued – both of which create a significant drag on working capital.
“Having cash flow under control is just the first step and is oftentimes a symptom of a bigger financial issue,” Mr Joyce said.
“Business owners need to take charge of their finances if they want to get ahead of their competitors and achieve their personal and business goals.”