Why MSMEs (micro, small & medium-sized enterprises) do not maintain proper records?

Small Business Maldives

Somebody once said to me, why are you so worried about digital adoption when the Maldives is one of the top countries in terms of internet penetration?. My answer was simple.

SME Bakery

We may use the latest and the best available hardware on the market at all times. Even teenagers use trending iPhones & other name brand phones. But still, many businesses are far behind in the scale of digital adoption. Many SME enterprises are not aware nor practice proper bookkeeping, business administration, and HR management techniques. Us the tech-savvy/ industry experts are well aware and have the know-how of efficiently deploying accounting & operational programs that digitally monitor & manage business operations saving both time & money for the owner. But a great proportion of SMEs does not.

What we need to do is to slowly educate our SMEs into adopting digital solutions that enhance their business and strengthen their credit & legal footprint. That’s is not a job for one man, not one business not one solutions provider but it has to be a national effort.

Why do SMEs play the dumb game to avoid keeping proper records?

Taxation, it’s just as simple as that. SMEs fear MIRA and do everything in their power to avoid any involvement with MIRA tax collectors. But in doing so many enterprises end up committing fraud, which is really bad. On the other hand, SMEs really have a very good reason to be this way. MIRA or Maldives Inland Revenue Authority wasn’t exactly the biggest fan of SMEs in its early days. Many small & medium businesses were fined at the same rates as large enterprises due to tax accountability compliance issues. Many businesses were knocked down to bankruptcy during this wave and to put fuel to this fire courts weren’t of much help to these enterprises. This was a lesson well learner for the remainder of the businesses but the message was not exactly clear.

It is also a fact that this situation had been improved over the years, more significantly in the past 3 years however the damage is done and still nothing solid has been surfaced like a more SME friendly tax accountability revision to regulations.

Small businesses still fear a forceful tax collection without accounting for any variables that are unique to this segment of businesses. That is one reason why such businesses try hard to transact off the books.

SMEs are ‘generally’ not very digital-friendly and that is one major reason why many do not invest or employ digital resources that are designed to help them take on the accounting aspect of the business with ease. Lack of this education results in many SMEs staying off the books until only when they think it’s necessary. Many businesses only update their accounting software or booking during month or quarter ends when tax accounting is necessary.

Here are 3 important software solutions that are designed to help SME businesses tackle their daily business needs digitally and are sure to reduce the costs involved compared to doing the same tasks manually.

1. Wave

Wave is a completely free all-in-one web-based accounting solution that is beautifully designed with the SME market in mind. It suits the needs of small & medium enterprises.

The wave includes Receipts & Invoices app on iOS/Android making it recording expenses & sending estimates, invoices and following on payments easy & mobile.

In the reporting aspect, Wave excels as well. With commonly required reports available in one click wave simplifies the process of quarterly reporting requirements such as GST reports, annual re ports.

2. QuickBooks

QuickBooks is one software that really does not require an introduction. Being the most popular accounting solution QuickBooks offers special packages designed for SMEs. If you would like something a little more robust, diverse & paid, QuickBooks is the perfect solution.

3. CRM Solutions (Salesforce/ Bitrix24/ Salesmate)

In this day & age, every business no matter how small or big must learn its way around CRM platforms. CRM or Customer Relationship Management platforms are tools that are designed to centralize leads generation, deals pipeline, invoicing, order management and many other business operations around customers.

These platforms easily integrate with dedicated accounting solutions such as QuickBooks, various marketing tools, social media management tools and many other business plugins to make it a truly powerful tool to run your business from one place.
Not maintaining records will result in troubles in the long-run. I suggest every start-up & SME give extra attention to making sure every transaction they do is recorded properly and in a manner that eases financial reporting when it’s required.

0 Replies to “Why MSMEs (micro, small & medium-sized enterprises) do not maintain proper records?”