Financial Literacy – new SFA report
The SFA recently launched the ‘Financial literacy amongst Irish micro, small and medium-sized businesses’ report, in collaboration with TU Dublin, Microfinance Ireland, SBCI and Skillnet Ireland. The survey was conducted by iReach.
The main findings of our survey include the following:
- 81% of respondents said financial literacy was very or extremely important, but only 46% said they had good or expert knowledge of financial literacy. Respondents thought that only 19% of other Irish business owners had good knowledge;
- 51% of business owners do not read their monthly accounts on a monthly basis;
- About a quarter of respondents do not produce important financial reports like debtor/creditor lists and sales and expenditure reports, while 16% of respondents do not use monthly reports;
- 34% said that they use financial statements to make business decisions and 42% said that they do not understand financial statements;
- 58% said they do not utilise financial statements as they believe that is the job of their accountant;
- The level of expertise was greater as the size of the business increased;
- 80% of respondents said that the primary use of monthly financial statements was to inform their banks;
- Respondents believed that 0% of Irish business managers generally had expert financial literacy, while 11% rated themselves as having expert knowledge (these had either majored in finance in college or were fully qualified accountants);
- 35% of respondents with low to moderate expertise had received no financial training; and
- Over half of respondents do not calculate basic financial measurements regularly, including Gross Margin Per Product.
In order to address the challenges highlighted in the report the following actions need to be taken:
- Ensure that the development of financial literacy amongst owner-managers in SMEs is a priority for government by including it in the forthcoming policy on SMEs and Entrepreneurship under Future Jobs Ireland;
- Develop financial literacy in our young people by exploring the primary and secondary school curricula to see where financial literacy could be included in a more meaningful way;
- Develop a blended learning financial literacy programme aimed specifically at SMEs to support a higher level of financial literacy expertise;
- Create a digital platform and campaign to increase financial literacy expertise among small business owners; and
- Raise awareness amongst education and training providers and professional bodies on the importance of integrating financial literacy within existing training and professional development courses targeting SMEs.
An electronic version of the publication can be downloaded here.