Small and Medium Enterprises (SMEs) play a crucial role in an economy, ranging from resource generation to employment creation. Ironically, these SMEs suffer from some sustainability challenges due to weak support functions, primarily the accounting and finance functions. Resultantly, they suffer operational and financial difficulties. A sound accounting system may ease this situation and help them counter these issues, provided they use it effectively.

Contrary to the critical role of the accounting system, most of these SMEs fail to comprehend it. It is primarily owing to the informal management practices and gut-based decision-making process. Further, these entities are mostly family organizations with flat structures that use direct supervision instead of a sophisticated internal control system.

1 Lack of prioritization

The management narrowly focuses on the core business operations and does not duly prioritize the support function in general and the accounting function in particular. They perceive the role of accounting function as limited to recording the transaction.

2 Inadequate budget

Because of a lack of prioritization, they do not earmark sufficient resources to acquire and manage the right solution. Typically such organizations decide on a low-cost basis. Hence, they systematically overlook the accounting software’s business requirements and other qualitative aspects.

3 Lack of trained staff

SMEs perceive that they cannot afford good quality resources. It is a gross misconception. However, without going into debate on this misconception, we would highlight that, resultantly, the quality of HR in these businesses is weak

4 Unrealistic expectations

It is also observed that despite the inadequate resources, the management has high expectations from the software. These unrealistic expectations blur their focus from the genuine business requirement.

5 Weak implementation services

Last but not least, implementation services play a critical role in the success of accounting software in an organization. These services include mapping business processes, designing relevant internal control, migrating data, configuring the system with the required functionality, and training the staff.

A sound accounting system is mission-critical for an organization. SMEs, in particular, should strategize the acquisition of the software and its implementation, considering these five common challenges.

Abdul Rauf – (FCA)