HM Treasury News Release

167/98                                 19 October 1998 
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BUSINESS NEEDS FINANCIAL MANAGEMENT HEALTH CHECKS 
SAYS GEOFFREY ROBINSON

Financial health checks for small firms should help improve their
financial management skills and prospects for growth, says a
Financial Management Working Group report launched today by
Paymaster General Geoffrey Robinson.

The Group found that good financial management brought numerous
advantages to small businesses, including better cash management
and decision making, easier access to finance, improved
profitability and reduced risk of failure.  But many business
owners/managers were unaware of the limitations of their own
skills.

Speaking at the launch of the Group's report, Geoffrey Robinson
said:

     "The Government is committed to removing barriers that hold
     back growth, enterprise and the development of dynamic
     businesses.  Financial management is an important area
     where Government, working with the business community, can
     look to deliver real benefits.

     "This Report is an important first step towards our goal of
     improving financial management across the small business
     community.  There remains a great deal to do.  The Report
     identifies areas of weakness and makes recommendations
     for tackling these weaknesses.

     "We must take forward this agenda to make sure the
     improvement in financial 
     management across this sector becomes a reality. I have
     asked Andrew Godfrey  to take forward the Group's proposals
     to develop simple low cost financial  health checks and to
     engage the Business Links organisation in their
     dissemination and use by small companies."

The Financial Management Working Group, which included
representatives from banks, small business organisations, the
accountancy profession and academia, the Treasury and DTI, were
tasked to look into the concerns from industry and Government
about the poor quality of financial managements skills among
small firms.

Their recommendations build on existing initiatives and are
designed to assess business financial management skills and
requirements and recommend appropriate training.  The Group also
recommends that the Government and others play a key role in
developing and, via Business Links, in signposting those checks.

Their Working Group, recognising the need to take account of the
diversity of small firms, recommended that:

     representative bodies, trade associations and service
     providers should raise awareness of the importance of good
     financial management;

     a wide range of free/low cost Financial Health Checks be
     delivered, building on existing initiatives, and designed
     to assess a business' financial management skills and
     requirements and recommend appropriate training.  The
     Government and others should play a key role in developing
     and, via Business Links, in signposting these checks;

     Business Links, in participation with other providers, make
     available a free comprehensive local guide to financial
     management training, support and services;

     professional accountancy bodies should provide relevant
     financial management training and best practice for their
     members and encourage them to provide more specialised
     services including financial management;

     the accountancy bodies and Business Link Network Company
     continue to work closely together to promote more effective
     local cooperation between accountants and Business Links;

     a thorough and independent evaluation of the role of formal
     mentor and non-executive director networks and search
     organisations, and that of the mentors they place in small
     firms, should be undertaken to establish their impact and
     examples of best practice;

     the British Bankers Association should ensure that the
     evaluation of the Small Business Initiative is published;

     the Management and Enterprise Training Organisation review
     the progress made on these recommendations every two years.


NOTES TO EDITORS

1. The Terms of Reference of the Financial Management Working
Group were to examine the importance of financial management in
smaller firms and to identify problem areas; identify the target
market, taking account of firm size, sector and growth; examine
the effectiveness of existing initiatives and delivery mechanisms
in improving the quality of financial management; and examine
what further steps might be taken to improve financial
management.

2. The Group Members included accountants Grant Thornton
International, the Association of Chartered Certified
Accountants, the Association of Independent Businesses, the Bank
of England, Barclays Bank, the British Bankers' Association, the
British Chambers of Commerce, the Chartered Institute of
Management Accountants, the Confederation of British Industry,
Durham University Business School, the Federation of Small
Businesses, the Forum of Private Business, the Institute of
Chartered Accountants in England and Wales, the Institute of
Directors, Lloyds TSB, Midland Bank, National Westminster Bank,
Riverside Consultants, ROMTEC, HM Treasury, and the Department
of Trade and Industry.

3. If you have access to the Internet, you can find this news
release and other Treasury information at http://www.hm-
treasury.gov.uk

# = pounds sterling