Small business managers lack procurement skills

1 February 2013
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3 February 2013 | Anna Reynolds

Senior managers of small businesses do not feel confident in controlling their company’s financial strategy as they lack procurement expertise, according to research by Basware.

A survey revealed 53 per cent of small and 59 per cent of medium-sized business owners believe a company’s procurement strategy should be the responsibility of senior management, despite one in three senior managers admitting they are unprepared to take on this role.

The research suggests that financial responsibility is being handed down from owners to senior managers, but 45 per cent of senior managers said they are yet to receive formal financial training. Those higher up in the organisation are also untrained in this area, according to 57 per cent of board members.

Rowan Lemley, product marketing manager at Basware told SM: “As small and medium businesses get larger, positions evolve and people find themselves acting as CFOs or CPOs without having the necessary expertise. There is less of an impetus to invest in procurement because it is not a function required by legislation, unlike accountancy.”

Lemley noted that small businesses often fail to invest in their process infrastructure and with no buying strategy, this can result in a company “stagnating”. He also said purchasing frequently ends up the responsibility of HR, which means less control and transparency over spend, while many small businesses “don’t know where to start” in terms of gaining procurement skills.

The survey also found several differences between regions. In Europe 44 per cent of organisations said expenditure was controlled by departments and functions compared to just 18 per cent in the US. Further, 38 per cent of European employees said they are not allowed to spend company money, with just 3 per cent of employees prohibited from spending in the US. A similar number of respondents from both Europe and the US said they wanted a greater understanding of how to manage company money (28 per cent and 33 per cent respectively).

The research surveyed 558 business owners and 1,368 employees with financial responsibility in small to medium sized firms across the UK, US, Sweden, Germany, Belgium and the Netherlands.

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