There are strong indications that more than 50 per cent of the 40 million Micro, Small and Medium Enterprises (MSMEs) in the country could not access any of the N1.65 trillion intervention funds allotted to MSMEs sector because of faulty business structures and bad record keeping.
To this end, it behoves on entrepreneurs either in the formal or informal sectors to keep proper books of account that will allow such SMEs access to intervention funds from federal or state governments as well as banks.
Importance Of Record Keeping
According to an entrepreneurship and small business management specialist, Dr Timi Olubiyi, “SMEs face credit discriminations from banks because of opacity of information, lack of business structure which he noted was quite common with SME operators who do not have in place audited financial statements.
He noted that for these reasons and more, it is usually difficult for SMEs to show credit quality to banks and other financial institutions, hence, they’re seen to experience more stringent credit terms than the large companies which are seen as less risky.
Without proper accounting system and bookkeeping, he stressed that it would be difficult to survive with the harsh environment in Nigeria, seeing as a good financial record and bookkeeping is the road map that shows us exactly how the business choices affect the profitability of the company.
“Develop a bookkeeping system that is the foundation of solid business record keeping, learning to track your business income and expenses effectively. Recall quality accounting practices can assist you to make timely payment or early payment, which is a good sign of business success.
“So, learning the way to create and read balance sheets, cash flow charts, and other financial records has become imperative for small businesses to survive in the competitive market. However, if this proves difficult, it can be outsourced.”
Advantages Of Having Proper Accounting Records
The federal government in recent times has floated several billions of Naira in intervention funds specifically for the SMEs sector, such as: N220billion for Micro, Small and Medium Enterprise Development Fund, the N330billion Real Sector Support Facility and the N1.1 trillion COVID-19 stimulus funds.
But the major requirement of good business structure and record keeping has denied about 20 million of these SMEs access to these intervention funds. Hence, proper book of account will allow SMEs tap into some of these funds.
Managing director of TBWA Concept, Mr Kelechi Nwosu also said that SMEs need to up skill their business knowledge and understand the prerequisites to apply for funds/loans while ensuring that they report the progress of such loans. He noted that MSME operators need to learn business management and marketing skills to evolve with the changing motivations of consumers.