Debitoor Dictionary

Accounting terms explained in a simple way

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Stakeholder – What is a stakeholder?

A stakeholder is any individual, group, or organisation that has an interest in a company.

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Anyone who can affect, or is affected by, a business’s activity is considered a stakeholder of that company.

Stakeholders can be bother internal and external. Internal stakeholders are individuals or groups who have direct financial exchange with the business. This includes employees, directors, suppliers, owners, creditors and customers.

External stakeholders are groups who do not have direct economic exchange with the business, but who can influence the business in other ways. This includes the government, who can affect the business through policies and taxation laws, as well as the media, trade unions, and the local community.

Primary vs. secondary stakeholders

Primary stakeholders are individuals or groups directly affected by the company’s activity. Primary stakeholders are usually internal stakeholders.

For small businesses, customers, owners and employees are usually considered primary stakeholders. In large companies, shareholders and directors have the most influence on corporate policy and the day-to-day running of the business, so are considered the most important primary stakeholders.

Secondary stakeholders are less influential than primary stakeholders. They are usually external stakeholders who can indirectly affect, or be affected by, the business.

For example, the government can update taxation thresholds for Stamp Duty or Capital Gains Tax. This is not a direct financial exchange with individual companies, but companies are still affected by the these polices.

Stakeholders and accounts

At the end of each financial year, companies must submit a set of financial reports known as statuatory accounts. These accounts report the company’s financial activity and overall performance. Legally, these accounts must be shared with shareholders, Companies House, HM Revenue and Customs (HMRC) and anyone who attends the company’s general meetings.

Statuatory accounts are also important for stakeholders more generally as the information they provide helps stakeholders determine how well the business is performing. With this information:

  • Shareholders can judge whether the business is meeting its financial goals, and whether directors should be re-elected at the next annual meeting;
  • Potential investors can see whether the business is financially stable, and whether it would be in their interest to invest;
  • Competitors can compare their profits and expenses;
  • Employees can see whether any financial activities are likely to affect their pay, bonuses, or job security.

Stakeholders in Debitoor

With Debitoor invoicing software, it’s easy to manage your business contacts.

Import customers and suppliers with just a few clicks. Set custom payment terms for each customer, and get a quick overview of your customers’ accounts.

With our larger plans, access the multi-user function and share your account with employees. Have up three team members in your account, and customise access for each member.