Financial management practices among small non-manufacturing companies

Small and Medium Enterprises (SMEs) have been very important in many countries including Malaysia because of its role for the country's economic growth. This paper explores the level of awareness towards the importance of financial management from the preparation of accounting reports and its information usage in the business. The research focuses on small non manufacturing companies because very few studies have been conducted in this area. Besides, the findings will help to reveal some of the key points that can contribute to the decision making and growth especially in the context of small companies. The research is conducted on a case study manner which is to concentrate more and consider a situation that is similar to the previous research done. The situation considered is among small non manufacturing companies which can provide useful tool to study the financial management in the companies and the usage of accounting information. Sources of data are gathered from primary and also from secondary data. The primary data is collected and gathered through an interview technique. The findings from the primary data are then is used with secondary data which is taken from previous researcher. This study found that the level of awareness on the importance of financial management is still very poor in small firms. It is found that lack of accounting knowledge has been the factor that causes them unable to use the accounting information wisely. Moreover, the companies still do not have the effort to find alternatives to improve themselves to increase the level of their knowledge. This problem of lack of accounting knowledge and the perception that they had on the financial matters at the end may affect the accuracy of the information and the credibility in decision making. In addition, in this paper the level of awareness on the importance of using information technology (IT) in managing companies’ financial also has been identified. The results show the difference in accounting preparation whether manually or computerized and its impact on the accounting information produced. The findings also show that companies that manage their financial using IT are still at minimal stages and prefer to use simple programmes such as Microsoft Excel and Word. Thus it can be concluded that most companies did not have proper and systematic financial records and the used of IT to assist in managing financial are not fully utilized.