NEW YORK & MONTVALE, N.J.--(EON: Enhanced Online News)--Optimism about the global economic recovery has risen among US businesses in 2013, especially from small- and medium-sized (SME) companies, according to new findings from ACCA (the Association of Chartered Certified Accountants) and IMA® (the Institute of Management Accountants) in their Global Economic Conditions Survey (GECS) analysis.
“US SMEs are likely to feel that they’re lagging behind the rest of a recovering US economy. They can see the recovery happening and even have confidence in it, but on their street and in their business it has yet to reach them.”
GECS is the largest global quarterly economic survey of accountants in the world, both in terms of the number of respondents and the scope of economic variables it monitors.
ACCA and IMA looked at the GECS quarterly survey figures from Q4 2011 to Q2 2013 and found that while confidence in the economic recovery was high, that optimism was not reflected in their own business’ prospects, which remained weak.
Rosana Mirkovic, head of ACCA SME policy, said, “This upturn in confidence was seen across the world from September 2012 onwards according to our GECS analysis, with the strongest turnaround taking place in the US. But that does not necessarily translate into recovery.
“Globally, mid-market businesses showed some strong confidence levels, and in the US that seemed to translate into greater investment in capital projects. Access to growth capital was easiest in the US out of all the major countries studied, and was even marginally better for SMEs & mid-market companies than large corporates.”
“Smaller businesses in the US were more likely than other markets to seek to benefit from economic conditions by focusing on niche markets and products. Those businesses in US were also most likely to report that growth capital had increased over the period analysed, so compared to the rest of the world, the SME businesses of the USA can see some light at the end of the tunnel.”
Raef Lawson, Ph.D., CMA, CPA, IMA vice president of research, added, “US SMEs are likely to feel that they’re lagging behind the rest of a recovering US economy. They can see the recovery happening and even have confidence in it, but on their street and in their business it has yet to reach them.”
“Finance professionals in the smallest businesses (less than 250 employees) in the US have identified difficulties in securing prompt payment from customers as a major stumbling block towards their own growth. It is a common issue for small businesses across the world during this fragile time of recovery. As new orders are increasing, the amount of working capital to be financed, SMEs find it hard to finance growth due to a lack of liquidity. As a result, SMEs increasingly draw on each other via trade credit and late payment. Our analysis of the GECS surveys confirms this is happening.”
Thirty-one (31) percent of SMEs with fewer than 250 employees identified prompt payment problems as having a negative effect on their business, compared with 21 percent of mid-market companies and 14 percent of large corporates in the US.
The GECS surveys revealed an interesting trend: business size influenced the type of economic recovery measures businesses took. With profit margins under pressure, that micro and small businesses were more likely to seek shelter from competition in niche markets or segments, mid-market firms were more likely to enter new markets while large corporates were more likely to pursue innovation.
According to Ms. Mirkovic, “Smaller businesses have gone niche in the recovery, and the US SMEs were leading the way in this approach. This analysis provides us with an important insight into how different companies respond to difficult conditions. Now is the time for SMEs to prioritize investments and seek internationally-focused market growth, as they prepare for a more stable economy.”
SMEs globally continued to face a tough environment with substantial pressure on profit margins; 89 percent of SMEs were under pressure from economic conditions on the ground, with tightening profit margins emerging as a major issue. This was especially true in emerging markets, where demand remained weak and inflation pressures intensified.
Despite these pressures, small and medium businesses were less likely than larger ones to have responded to economic pressures with a loss of business capacity, holding back on staff cutbacks and capital investment.
For full survey results please visit http://tinyurl.com/p9ur44l.
ACCA (the Association of Chartered Certified Accountants) is the global body for professional accountants with 162,000 members and 426,000 students in 170 countries worldwide. We aim to offer business-relevant, first-choice qualifications to people of application, ability and ambition around the world who seek a rewarding career in accountancy, finance and management.
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About IMA® (Institute of Management Accountants)
IMA®, the association of accountants and financial professionals in business, is one of the largest and most respected associations focused exclusively on advancing the management accounting profession. Globally, IMA supports the profession through research, the CMA® (Certified Management Accountant) program, continuing education, networking, and advocacy of the highest ethical business practices. IMA has a global network of more than 65,000 members in 120 countries and 300 professional and student chapter communities. IMA provides localized services through its offices in Montvale, N.J., USA; Zurich, Switzerland; Dubai, UAE; and Beijing, China. For more information about IMA, please visit www.imanet.org