OBSTACLES AND STRATEGIES: AN IN-DEPTH EXAMINATION OF FINANCIAL MANAGEMENT IN SMALL AND MEDIUM ENTERPRISES

Abstract

Financial management stands as the linchpin in the development of Small and Medium-sized Enterprises (SMEs), permeating every facet of these businesses, from fundraising and capital allocation to supply, production, and sales. However, the financial management landscape of SMEs in China faces numerous challenges, including a shortage of skilled financial personnel and limited managerial awareness. These issues significantly impede the growth potential of SMEs, which constitute a substantial segment of the Chinese business landscape. To explore the potential solutions, two distinct research studies were conducted. Hussain Javed's research sought to assess whether enhancing financial knowledge could mitigate information asymmetry, reduce collateral requirements, optimize capital structures, and enhance financing channels for SMEs. Qualitative research involving SMEs with over five years of operation revealed that improved financial literacy and reduced regulatory burdens positively influenced enterprise growth. Financial management knowledge emerged as a pivotal resource empowering SME owners to make informed decisions. Meanwhile, Tanklevska Nataliya aimed to define the nature and priority tasks of managing enterprise financial potential and to outline crisis management-based methodologies for effective financial potential management. The introduction of financial management concepts was found to elevate the quality of financial potential management and establish a foundational crisis management task list for these enterprises. Both studies underscore the necessity of bolstering financial management in SMEs, especially in the Chinese context, where rectifying financial management deficiencies is essential for fostering enterprise development.