An effective accounting system goes far beyond meticulous record-keeping. It transforms raw data into actionable insights that empower informed decision-making.
This applies not just internally, guiding business strategies, but also externally, fostering trust with stakeholders like investors and creditors.
The digital revolution has ushered in a golden age for financial management. Gone are the days of tedious manual processes.
Today, a plethora of user-friendly apps, accessible on smartphones, streamline every aspect, from credit card transactions to customer interactions and invoice management.
These tools are not just convenient; they’re cost-effective, saving businesses precious time, money, and energy.
Today, every financial function, from basic calculations to complex data analysis, has a dedicated app. This dream is becoming reality, with solutions catering to businesses of all sizes.
By leveraging these tools and achieving seamless data synchronization, businesses can free up valuable resources to focus on growth.
The impact on small businesses, particularly in developing economies like Nigeria, has been transformative. Prior to these advancements, calculating daily transactions was a formidable task.
Traditional accounting, a multi-step process encompassing identification, recording, measurement, classification, verification, summarization, analysis, interpretation, and communication of financial information, was a significant burden for many small business owners.
Small and medium-sized enterprises (SMEs) are not only crucial in stimulating economies, but they also play an important role in the drive towards technology and innovation, which is fundamental to Nigeria’s economic development.
Nevertheless, SMEs are hindered in embracing meaningful approaches that are fundamental to managing the digitization of financial services, both in the form of basic payments and in engaging in digital finance for broader financial transactions.
For an uninformed entrepreneur, navigating this complex process to determine profit or loss, asset value, and liabilities was a daunting challenge.
Fortunately, accounting apps have democratized financial management, empowering even those without formal training to gain crucial insights into the health of their business.
This not only improves internal decision-making but also lays the foundation for building trust with external stakeholders, ultimately propelling business growth.
Oluwafolakemi Evelyn Aina, the co-founder of Finledger, provided insights on the issue.
According to her, while effective management software might be expensive for several SMEs, it should not be viewed as luxury, but an investment in efficiency and ultimately, profitability.
In her words:
”Most Small businesses especially with the state of the economy now are struggling to keep up while still maintaining control of their finances and other aspects of the business. While most of them require management software to help manage their business better, they would not due to cost.
“I have had people say ‘I don’t think I can afford anything of such because they are usually expensive.’While every business should be focused on profits, it is also important to reduce cost.
The founder also argues that hybrid management tools, with their emphasis on ease of use, are a valuable asset for busy SME owners and solopreneurs, allowing them to streamline operations and focus on growth.
The major problem with small-scale entrepreneurs is the crucial bottleneck of finance, depending on the availability of financial resources, which are mostly bank credit, to meet both their short-term and long-term needs.
Furthermore, there are other factors that act as constraints to small business development, such as management, outdated technology, lack of geographical location, as well as lack of infrastructure to support the production efforts of the small businesses. However, Finledger offers seamless solutions to these business gaps.
According to Aina, with traditional paper-based record-keeping for business finances creating inaccurate financial records for SMEs, Finledger aims to empower businesses with a user-friendly app that streamlines financial record-keeping, fosters transparency, and ultimately positions them for success in areas like attracting investment and achieving growth.
“Finledger is looking to help businesses with proper management and recording of their finances , what I mean is instead of going through the hassle of recording on a piece of paper, we want to, and we will come up with a solution whereby people can use an app to get their accounting records done with automate calculations.
“If the finances of a business is not accurate, and transparent and easy to read and translate by prospective investors, for example it could really pose a problem for such a business hindering them from funding opportunities and more.”
It is becoming more imperative for Nigerian SMEs to embrace digital financial management applications. These tools hold the key to unlocking exponential growth and optimized business outcomes.
However, despite the undeniable benefits – from streamlined record-keeping to insightful data analytics – a significant number of Nigerian SMEs remain hesitant.
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