Financial management in small to medium enterprises (SME) is different to the one in large firms. This is mainly because of the more dynamic nature of their cash flow cycle and their ability to raise finance through debt or equity. Furthermore, large firms are able to use financial management and accounting systems which SMEs lack, as well as professional staff, to manage such systems. In most small or medium enterprises, it is the owner’s job to perform these tasks, sometimes with support from an accountant or a bookkeeper. However, many business owners lack proper financial management training and have limited resources to fund this type of assistance.
Financial statements deliver information on how the business is operating financially and why. Implementing good financial practices in your business can help you identify the current issues and teach you to plan for the successful financial future of your business. By regularly producing financial statements you will provide financial information for continual improvement of business operations.