This paper reports on an investigation of financial management practices used by small, medium-sized and micro-enterprises (SMMEs) in South Africa. It was found that more than half the SMMEs examined use external accounting staff to prepare accounting reports and more than 60% rely on external accounting staff to interpret and use accounting information. A majority of the SMME owners were found to lack interpretation skills and an awareness of how to use information from financial statements. An implication of this study therefore is that policy makers, business support organizations, banks and academic institutions need to focus on educating SMMEs more effectively in financial management, thereby mitigating the risk of cash flow problems and business failure.
AbanisT.SundayA.BuraniA.EliabuB. (2013), ‘Financial management practices in small and medium enterprises in selected districts in Western Uganda’, Research Journal of Finance and Accounting, Vol 4, No 2, pp 29–42.
2.
AbdullahF.HamaliJ.DeenA.R.SabanG.AbdulrahmanAbg A.Z. (2009), ‘Developing a framework of success of Bumiputra entrepreneurs’, Journal of Enterprising Communities: People and places in the Global Economy, Vol 3, No 1, pp 8–24.
3.
ArmstrongW. (1986), A Handbook of Management Techniques, 1st edition, Kogan Page, London.
4.
ArmstrongW. (2001), A Handbook of Management Techniques, 3rd edition, Kogan Page, London.
5.
BabbieE. (2007), The Practice of Social Research, Thomson Wadsworth, Belmont, CA.
6.
BabbieE.MoutonJ. (2001), The Practice of Social Research, Oxford University Press, Cape Town.
7.
BerryJ.A.SweetingR.CassimR.KesperA.RajaratnamB.SeventerD.E. (2002), The Economies of SMMEs in South Africa, http://www.tips.org.za/506.pdf (accessed 15 May 2007).
8.
BerryJ.A.SweetingR.GotoJ. (2006), The effects of business advisers on the performance of SMEs', Journal of Small Business and Enterprise Development, Vol 13, No 1, pp 33–47.
9.
BlackburnR.CareyP.TanewskiG.A.2010, ‘The role of competence, trust and professional ethics in the supply of external business advice by accountants to SMEs’, Research Report, Association of Chartered Certified Accountants (see: http://www.accaglobal.com).
10.
BlackburnR.EadsonW.LefebvreR.GansP. (2006), ‘SMEs, regulation and the role of the accountant’, ACCA Research Report No 96, ACCA, London.
11.
BrinckmannJ.SalomoS.GemuedenH.G. (2011), ‘Financial management competence founding teams and growth of new technology-based firms’, Entrepreneurship Theory and Practice, Vol 35, No 2, pp 217–243.
12.
BruwerJ.P. (2010), ‘Sustainability of South African FMCG SMME retail businesses in the Cape Peninsula’, MTech Thesis (Internal Auditing), Cape Peninsula University of Technology, Bellville.
13.
Department of Trade and Industry (1995), ‘National strategy for the development and promotion of small business in South Africa’, White Paper on Small Business, DTI, Pretoria.
14.
Department of Trade and Industry (2003), ‘State of small business development in South Africa: Annual review 2002’, DTI, Pretoria.
15.
Department of Trade and Industry (2008) The DTI Group SMME Services 2008, DTI, Pretoria.
16.
DodgeH.R.RobbinsJ.E. (1992), An empirical investigation of the organisational life cycle model for small business development and survival’, Journal of Small Business Management, Vol 30, No 1, pp 27–37.
17.
DovingE.GooderhamP.N. (2008), ‘Dynamic capabilities as antecedents pf the scope of related diversification: The case of small firm accountancy practices’, Strategic Management Journal, Vol 29, No 841–857.
18.
EveraertP.SarensG.RommelJ. (2006), Outsourcing of Accounting tasks in SMEs: An Extended TCE model, University of Gent, Kuiperskaai.
19.
FatokiO. (2012), ‘The impact of entrepreneurial orientation on access to debt finance and performance of small and medium enterprises in South Africa’, Journal of Social Science, Vol 32, No 2, pp 121–131.
20.
FirerC.RossS.A.WesterfieldW.JordanB.D. (2004), Fundamentals of Corporate Finance, McGraw-Hill, Maidenhead.
21.
GitmanL.J. (2003), The Principles of Managerial Finance, Pearson Education, New York.
22.
HarifM.OsmanH.B.HoeC.H. (2010), ‘Financial management practices: An in-depth study among CEOs of small and medium enterprises (SMEs)’, International Review of Business Research Papers, Vol 6, No 6, pp 13–35.
23.
HerringtonM.WoodE. (2004) Global Entrepreneurship Monitor – South Africa Executive Report 2003 Update, Graduate School of Business, University of Cape Town, Cape Town.
24.
IFC (2006), Access to Finance for Women entrepreneurs in South Africa, International Finance Corporation, Johannesburg.
25.
IsmailA.N.ZinM.R. (2009), ‘Usage of accounting information among Malaysian Bumiputra small and medium non-manufacturing firms’, Journal of Enterprise Resource Planning Studies, Vol 2009, 7 pp, see: http://www.ibimapublishing.com/journals/JERPS/2009/101113.pdf (accessed 27 August 2014).
26.
JayansankaranS. (1999), ‘Malay dilemma’, Far Eastern Economic Review, Vol 162, No 18, pp 50.
27.
KeownA.MartinJ.D.PettyW.J.ScottD.F. (2002), Financial Management: Principles and Applications, 9th edition, Prentice-Hall, Upper Saddle River, NJ.
28.
LeeS.FilbeckG. (2000), Financial management techniques in family businesses', Family Business Review, Vol 13, No 3, pp 201–216.
29.
MasekoN.ManyaniO. (2011), ‘Accounting practices of SMEs in Zimbabwe: An investigative study of record keeping for performance measurement’, Journal of Accounting and Taxes, Vol 3, No 8, pp 171–181.
30.
McMahonR.P.G. (1999), ‘Putting SME financial reporting into theoretical and practical perspective’, Research Paper Series 98–100, Flinders University, Adelaide.
31.
McMahonR.P.G.DaviesL.G. (1994), ‘Financial reporting and analysis practices in small enterprises: Their association with growth rate and financial performance’, Journal of Small Business Management, Vol 32, No 1, pp 9–17.
32.
NayakA.GreenfieldS. (1994), ‘The use of management accounting information for managing micro businesses’, in HughesA.StoreyD.E., eds, Finance and the Small Firm, Routledge, London.
33.
NguyenK.M. (2001), ‘Financial management and profitability of small and medium enterprises’, Doctor of Business Administration thesis, Southern Cross, Ho Chi Min City, Vietnam.
OogheH. (1998), ‘Financial management practices in China: A case study approach to companies in the Shangai region’, European Business Review, Vol 98, No 4, pp 217–226.
PerrenL.GrantP. (2000), ‘The evolution of management accounting routines in small businesses: A social constructive perspective’, Management Accounting Research, Vol 11, No 4, pp 391–411.
39.
PetrusH.G. (2009), ‘An investigation into causes of success and failure in small businesses with the Department of Social Development in the Eastern Cape’, Master's Degree thesis, Rhodes University, Grahamstown.
40.
PullenR.J.CooleyP. (1979), ‘Small business cash management practices’, American Journal of Small Businesses, Vol 4, No 2, pp 1–11.
41.
RobsonC. (2002), Real World Research: A Resource for Social Scientist and Practioner-Researchers, Blackwell, Oxford.
42.
ShaS. (2006), ‘An investigation into problems facing small-to-medium-sized enterprises in achieving growth in the Eastern Cape: Enhancing the strategy for developing small growth potential firms in the Eastern Cape’, Master of Commerce thesis, Rhodes University, Rhodes.
43.
TungR.L.AycanZ. (2008), ‘Key success factors and indigeneous management practices in SMEs in emerging economies’, Journal of World Business, Vol 43, No 4, pp 381–384.
44.
ViyakumarA. (2001), Working Capital Management: A Comparative Study, Northern Book Center, New Delhi.
45.
WeygandtJ.J.KiesoD.E.KimmelP.D. (2000), Financial Accounting, John Wiley, New York.
46.
WolmaransH.P. (1999), ‘Financial management education: Is there a gap between academics and practioners?’, South African Journal of Economics and Management Science, Vol 2, No 3, pp 523–535.
