Growing SMEs in PNG through accounting and financial services
Papua New Guinea’s SMEs are receiving much needed accounting and financial advisory through development of the business services sector in the large Pacific country.
Small and medium enterprises (SMEs) many of which run outside the formal economy, make up the majority of businesses in PNG and the Pacific. They have had limited access to business services or lack awareness of the benefits services such as professional business strategy advice, technical assistance, training and mentoring can have to unlock their growth potential and boost employment.
Papuan New Guinean accountant and financial adviser, Akae Beach, says the market for business advisory services in PNG is huge.
“I knew that there were not many people helping the SME market. There is help for larger corporate clients but a gap for SMEs. My strategy is to focus 50% of my clients on SMEs.”
Akae’s company, Beach Accounting and Advisoryhas supported more than 130 SMEs in the past year, and she believes SME’s are important to grow the economy and increase revenue for the country and drive economic growth.
Making SME’s compliant and improving basic accounting and finances can take a business forward, create more jobs and diversify the economy.
“I want to help businesses not just with trouble shooting but with strategy – helping them grow and help them achieve their goals through finance, accounting and general business advice.”
There are currently significant constraints to SME growth and investment, particularly the difficulty in accessing finance by SMEs, despite sufficient liquidity in the banking sector. Compliance through good accounting can be the simple, yet rare component SMEs need in readiness to access finance.
John Nell, a business advisor working with Business Link Pacific to support service providers in PNG says more businesses are now outsourcing accounting, finance and payroll to trusted advisers.
“This is a good move as in many SMEs, accounting and finance is a mess. There is a journey these SME’s need to go on to actually understand that it’s a good thing to get outside help – to get another set of eyes into their business to see what is going on,” he said.
“It is good for compliance as they need tax returns for loans.”
The Government in PNG predicts the number of SMEs to grow from around 49,500 in 2015 to 500,000 by 2030, create around two million jobs and contribute 50% of the country’s GDP.
But trust issues and the cost of accessing business advice remain as constraints to SMEs accessing business advice. There is a reluctance to go outside for help and most SMEs can’t afford the big advisory firms.
Business Link Pacific is working with service providers such as Beach Accounting and Advisory to subsidise the costs for eligible SMEs to engage quality accounting and financial advice.
“This is a big help for SMEs in PNG as advisory is not cheap,” said Akae Beach.
“If I am serious about helping SMEs I won’t charge them an hourly fee I will charge them a fee based on activities.”
Business Link Pacific’s subsidy scheme gives those SMEs that need it, that boost to engage in business advice and hopefully see the benefits through growth in their business and profits.
“It’s really about getting companies across the line to be convinced to use service providers,” said John Nell.
“We can say to SMEs ‘there is a subsidy to cover some of the costs and if you like it, if you have a good experience with it, continue to use it down the track.’”
For both John Nell and Akae Beach, it’s about developing that trust with SMEs that it is worthwhile using outside business assistance.
“The more outside assistance a company has the more eyes, the greater depth of experience you tap into and the more likely you are going to have positive outcomes from it,” said Nell.
Are you a small and medium enterprise operating in PNG or the Pacific? Would accessing business advice be of value to your business? If so, please get in touch with Business Link Pacific on +64 21 209 3578 | +64 22 559 9647 [email protected]