Review of Related Literature

Financial Management

Financial management involves strategic planning of how a business should make and

spend money.This includes decisions about raising capital, lending, and budgeting money.

Financial management encompasses the creation of financial goals and analyzing the data

(Xero, n.d.). It is the commerce work that bargains with contributing the accessible budgetary

assets in a way that greater business success and return-on-investment (ROI) is accomplished.

Financial managers and professionals, organize, and control all transactions in a business,

focusing on sourcing the capital whether it is from the investment of the owners, debt financing,

business funding, open issue, or any other sources. Financial management experts are

responsible for monetary budgeting in an optimized way to guarantee more prominent monetary

steadiness and development for the organization (Pandey, 2023). Several financial tasks,

including accounting, fixed-asset management, revenue recognition, and payment processing,

are combined into a financial management system. Through the integration of these essential

elements, a financial management system assures instantaneous insight into an organization's

financial condition and streamlines routine tasks, such as period-end closure procedures

(Strutner, 2023).

Effective Financial Management Strategies

According to AccountsIQ (n.d.), the process of managing a company's finances to

achieve the objectives of the organization is known as strategic financial management. It's a

management strategy that develops a strategic plan using a variety of strategies and financial

instruments. It also guarantees that the plan is carried out exactly as intended and that the

approach is long-term feasible. By utilizing Financial management strategies, leaders execute

decisions that help a firm fulfill its long-term objectives . It's possible that they will lose this year

in order to succeed in two, five, or even 10 years (Russell, 2023). Multiple studies have already
recognized the significance of effective financial management strategies for improving the

businesses’ performance. In a study of Salamah (2023), in an ever-changing and more complex

business environment, effective financial management becomes a very important factor in

ensuring business continuity and improving company performance. Therefore, companies must

constantly monitor and regularly evaluate their financial management strategies to ensure

long-term success. In addition, companies must consider ethical and sustainability factors in

their financial management. Responsible and sustainable decision-making can help companies

maintain their reputation and support long-term business growth. Furthermore, financial

decisions are of significant importance in business’ several organizational activities and factors

that contribute to company failure business can be managed by an effective decision-making

process in the form of a proper strategy and financial management. Excellent decision making

helps the organization drive sustainable growth and organizational goals (Al Muhairi &

Nobanee, 2019). This was supplementarily supported by another study by Hasanudin (2023),

Financial analysis allows owners and managers to quantify business performance using

corporate financial formulas and ratios. Effective financial management can help SMEs perform

better. Effective financial management practices can enhance the performance of MSMEs.

MSMEs can achieve their goals and become sustainable by knowing and adopting the right

approach to financial management.

There are several financial managerial practices and activities that financial

management encompasses and among these, that are always referenced and must take into

account by all businesses are the internal control, capital management, and financial literacy.

These three key factors are among the numerous aspects that businesses should look into to

ensure stable, efficient, sustainable and effective financial management strategies.

Internal Control

Internal controls encompass the set of policies and procedures put into effect by an

entity with the aim of guaranteeing the reliability of their financial reports, the efficiency of their

operations, and the adherence to pertinent laws and regulations (Gartner, n.d.). The primary

purpose of internal controls is to mitigate errors and irregularities, detect issues, and guarantee

the implementation of appropriate corrective measures. It is common for process owners within

departments to execute controls and engage with the control framework on a daily basis, often

without conscious awareness, as controls are inherently integrated into operational procedures

(UCSF, n.d.). In a study by Tackett et al., (2006, as cited in Alawaqleh, 2021) internal control is

a process, defined by accounting and auditing, that ensures organizational and operational

efficiency and effectiveness, reliable financial reporting and compliance with laws, regulations

and practices. According to the COSO internal control framework, there are five components of

the COSO Framework that establish the key areas where organizations need to work towards

compliance. These are the control environment, risk assessment and management, control

activities, information and communication and monitoring.

The components of internal control such as e.g control environment, risk analysis,

control measures, information and communication systems, supervision and monitoring are very

crucial for SMEs because they have a major impact on development of feasible activities

objectives, intended goals, and to attain the desired profitability (Garcia, et.al., 2021). Internal

control is extremely important for all types of businesses as it can give, if implemented correctly,

growth opportunities for organizations and create a similar, higher income, generate more jobs

and increase the gross national product. However, as a result of a study in the southern region

of state Mexico, this is a challenge for micro and small businesses to implement internal controls

because they lack a lot of resources, but it would have a big impact on the economy if were

correctly planned and executed (Carbajal, et.al., 2021). Another statistical test result in an

investigation in Magelang District, Indonesia shows that there is still no optimized internal
control in SMIs which is the main cause of businesses’ failure and that SMI leaders can sustain

its business by means of providing effective and developed internal control functions through

internal control aspects (Khikmah, et.al., 2019).

Capital Management

Capital Management or often called working capital management is the strategic

deployment of cash to achieve this balance and maintain healthy asset/liability ratios. Using

working capital management, businesses can ensure they have enough cash on hand to meet

their obligations and ensure steady growth for the organization (Saltarelli, 2023). An article from

London Premier Centre (2022) states that working capital management refers to all the

mentioned financial procedures that guarantee the profitability of the business, the safety of its

assets, the credit balance, and the availability of cash liabilities for ongoing projects. Effective

working capital management is essential to the treasury balancing of any business. As a result,

every business concentrates on developing precise and fundamental accounting principles for

all short-term operations, plans, client agreements, and purchasing procedures. Monitoring and

maximizing the use of current assets and liabilities is the goal of working capital management,

which seeks to maximize a company's resource utilization. The objective is to keep up enough

cash flow to cover short-term debt obligations and operating costs while maximizing profitability.

The cash conversion cycle (CCC) measures how long it takes a business to turn working capital

into cash that can be spent and working capital management is essential to this process

(Tuovila, 2023).

Roy (2023) posits that any business must have effective working capital management.

Think of it as the source of oxygen that keeps your company alive and well. However, on the

other hand, many SMEs struggle to manage the intricacies of working capital despite its

significance. In India, there are almost 6.3 million SMEs, a huge increase in recent years but

only 2.5 million of them, nevertheless, have obtained credit from official sources. These
numbers demonstrate the significant obstacles small businesses face in obtaining funding,

which are frequently caused by a lack of resources and opportunities for collaboration.

Some previous research highlighted the significant relationship and influence of working

capital management on company profitability (Nastiti, et.al., 2019; Agyemang, et.al., 2019; Al

Mufti, et.al. 2023). Braimah, et.al. (2021) research result findings indicate that WCM has a major

impact on corporate profitability, although the effects of each WCM component vary. This implies

that in order to maximize profitability, each WCM component might require a different

management approach. In a study where eight models are run within the framework of the

paper 119 industrial enterprises listed on the Vietnamese stock market were examined for nine

years, from 2010 to 2018, to determine the effects of the WCM on the firm's profitability. The

effects of the WCM, as determined by the CCC and its three components—the ARD, the INVD,

and the APD—on the profitability of the company, as indicated by the ROA (book value) and the

Tobin's Q (market value), are both negative and statistically significant. Which implies that

establishing a fair working capital policy will help companies become more profitable and add

value for investors (Boisjoly, et.al., 2020). Managers should strive to maintain as close to the

ideal level of net working capital as possible and minimize any deviations in order to optimize

profitability. Furthermore, it adds to the body of knowledge regarding the importance of effective

working capital management and reveals a concave quadratic rather than a linear relationship

between working capital management and profitability (Korent and Orsag, 2018).

Financial Literacy

According to the study of Usama et al., (2019), Financial literacy is defined as financial

knowledge and understanding. abilities that enable entrepreneurs to put effective business

plans into action They need financial management strategies for their businesses. Literacy

ability to read and write, as well as knowledge and expertise in a particular area. The degree to

which someone is financially literate is defined as understands fundamental financial concepts

and has the capability and self-assurance in managing personal finances appropriate,

short-term decision-making and sound, long-term financial planning, while keeping life events

and opportunities in mind. Economic conditions are changing. Financial literacy is gaining

interest in both developed and developing countries, including Nigeria. However, a review by

Matewos (2016) found low levels of financial literacy in both developed and developing African

countries. This highlights the need for policymakers and academics to understand the level of

financial literacy in the population to develop appropriate financial education and policy

interventions to improve personal financial literacy. Financial literacy involves discernment and

making effective decisions on the utilization of financial management. It affects an individual's

value system and behavior, positively impacting their decision-making on financial matters. The

increasing complexity of financial markets and the cost of business failure demand personal

financial management capability in both individuals and businesses. In small businesses,

financially literate entrepreneurs manage resources more widely, use financial information more

astutely, and improve profitability. Financial literacy also enhances participation in financial

markets, facilitates asset accumulation and consumption smoothing, and access to broader

funding sources. Financial literacy is linked to debt and investment literacy and influences the

access and utilization of financial services. Lusardi (2013) suggests that financial literacy

enables individuals to process economic information and make informed decisions about

financial planning, saving, debt management, and investment diversification. Financial literacy is

an active process with dual consecutive results, and entrepreneurs with financial knowledge and

attitude are found to implement lessons learned from financial education and decide on financial

services and products in their best interest.

As stated by Alcantara (2018) and Caparas and Abad (2020) studies on the impact of

financial literacy on the business performance of small and medium enterprises (SMEs) in the

Philippines found a significant relationship between financial literacy and business performance.
Higher financial literacy led to better decision-making and improved financial management

practices, particularly in terms of profitability and growth.

Chavez et al. (2018) highlighted the need for financial literacy training and support for

SMEs to improve their financial decision-making skills. Various financial training programs have

been proven to drive improvement in financial management skills and practices. Mapa et al.

(2019) also analyzed the financial literacy levels of Filipino entrepreneurs and identified

significant factors influencing their financial literacy. The results showed that education and

training significantly impacted financial literacy levels, and financial literacy programs for Filipino

entrepreneurs promote financial inclusion and improve their financial decision-making skills.

Overall, these studies and literature suggest that financial literacy is essential for the success

and sustainability of MSMEs in the Philippines.

Financial Management Strategies Impact on Profitability

According to Musah et al., (2018), their study aims to address the lack of literature on the

financial management practices of SMEs in Ghana and their impact on growth and profitability.

Finance management practices refer to the management of funds and their use to achieve

organizational objectives and maximize shareholders' value. These practices include accounting

information systems, fixed assets management, working capital management, financial

reporting and analysis, and capital structure management. Financial management is viewed as

the creation of wealth, planning and monitoring of a business's financial assets, improving

profitability, and generating the required return to capital providers. It encompasses all aspects

of management that affect a company's finances and what is needed to achieve the overall

objective of the organization. Accounting information systems are essential for recording and

analyzing business transactions, preparing financial statements, and preparing financial

statements for users. Research on SMEs globally emphasizes the importance of accounting

information systems for their survival and growth. Financial statements provide valuable
information for planning, evaluation, and decision-making. Overall, financial management

practices encompass all aspects of management that affect a company's finances and what is

needed to achieve its overall objectives. Financial Management Practices, according to Isak et

al., (2019), has significantly improved the financial performance of enterprises. The ability of the

company to manage working capital and make investment decisions remains strong. becoming

better. Eton et al., (2018) and Matei et al., (2021) define business as Organizations should

devote more time and resources to providing their employees with the fundamental financial

management knowledge and skills they need to embrace business sustainability. They must

have fundamental financial management knowledge and skills in order to succeed in business.

sustainability. Small businesses should participate in financial management training to improve

their financial management skills as explained by Bismark et al., (2018). The capability of

injecting the appropriate amount of capital into a business and efficiently assisting in the The

enterprise's growth and profitability.

Companies should implement optimal financial decisions aimed at improving their firms'

financial performance and also adopt financial management practices that aid in the expansion

of their firm's market share and Profits (Muguchia, 2018). Similarly, (Marus Eton et al..., 2020)

claims that there is a need for business firms to align their business operations with the best

financial management practices and train their employees on the internal control activities that

ensure adherence to accounting and financial record principles. As stated by (Yohanes et al.,

2018), an effective financial management practice may result in the expansion of Small-scale

enterprise success and profit'. These financial management Small-scale practices in resource

allocation, procurement, and cash budgeting rotate. entrepreneurs. It is critical for small

businesses to ensure that they have adequate and consistent funding. supply of financial

resources to run their activities in order to get good returns. A well-known financial institution

Management practices assist managers in understanding a company's financial position at any

given time. point in time and aids in forecasting future financial needs and trends (Muhozi and

Mulyungi, 2018).

As indicated in the study of Pagaddut (2021), MSMEs play a crucial role in the

Philippine economy, contributing 35.7% to the national value-added. Despite their size, they only

employ 5.510,760, accounting for 62.40% of total employment. MSMEs drive innovation, which

in turn drives country-wide prosperity. The Philippine laws, such as the Magna Carta for Small

Enterprises, the Barangay Micro Business Enterprises Act of 2002, and the Go Negosyo Act,

prioritize and promote MSMEs. The MSME Development Program 2017-2022 and the ASEAN

Strategic Action Plan for SME Development 2016-2025 aim to empower MSMEs and promote

integration and internationalization. However, MSMEs face challenges such as limited

resources, limited market access, and limited knowledge and competencies. Financial

performance is another significant concern for MSMEs, as it reflects how an entity uses its

resources to achieve its entrepreneurial goals. By focusing on financial factors that can boost

MSMEs' financial performance, they can overcome challenges and contribute to the nation's

economic growth.

The study of Pagaddut (2021) reveals that financial ratios such as Debt Ratio, Asset

Turnover, and Gross Profit Margin significantly impact the financial performance of Philippine

MSMEs. It suggests that these entities should remain self-sufficient and avoid excessive debts,

create contingency funds, and guard against default risks. MSMEs should be optimally operated

to generate sales by efficiently employing their resources, engaging with larger and better

customers, and selling only quality essentials. They should also manage controllable costs of

sales by reducing discretionary expenses and ensuring the quality of outputs. The study

concludes that there is a factor structure that can explain the variation among financial factors

affecting Philippine MSMEs' financial performance. They should design their planning,

organizing, directing, implementing, and controlling activities to ensure sustainability and

efficiency, as indicated by sound financial ratios. They should provide and effectively utilize their

assets to secure business continuity in the long run, and efficiently employ their assets to

achieve sound liquidity and profitability. The study also suggests a cohesive clustering that can

separate the financial factors affecting Philippine MSMEs' financial performance. They should

work to sustain good ratios and improve poor ratios, analyze their strengths and weaknesses,

and enhance entrepreneurial potentials and productivity while eliminating business inefficiencies

and ineffectiveness.

Forecasting

As indicated in the study of Rombe (2018), effective business forecasting positively

impacts business growth, while ineffective use can negatively impact growth. Forecasts,

whether financial or specific to business, are informed guesses. Most forecasts fall

under two overarching approaches: qualitative and quantitative. Qualitative methods are

expert-driven and focus on short-range predictions, while quantitative methods are

concerned with data and avoid fickleness in people. Significant demand and trend

prediction is essential for managers to cope with seasonality, sudden changes in

business levels, competition, strikes, and large economic swings. To handle the

increasing variety and complexity of managerial forecasting problems, many forecasting

techniques have been developed in recent years. Each has its own special use, and

care must be taken to select the correct techniques for particular applications. The

selection of method depends on factors such as the relevance and individuality of

historical data, accuracy, desirability, time period, cost/benefit, and time available for

analysis. A manager should not assume that when asking a forecaster to prepare a

specific projection, the request itself provides sufficient information for the forecaster to
do the job. Successful forecasting begins with collaboration between the manager and

the forecaster, answering main forecast object questions. A decision maker can help the

forecaster formulate the forecasting problem properly, gaining more confidence in the

forecasts provided and using them more effectively. The forecaster must bring together

the technique with the manager's knowledge and experience.

The study of Vidhate (n.d.) indicate that financial forecasting is a crucial exercise for

business owners, as it helps guide day-to-day decision-making and provides valuable

information about the overall financial health and efficiency of the business. Even a

one-person company needs to have a financial plan in place. Cash management is

essential for businesses, as it helps keep a tight grip on expenditures during low

revenue periods. A structured financial plan with a cash cushion helps the business

owner sleep better at night and take advantage of opportunities, such as purchasing

inventory from a supplier at temporarily reduced prices. A long-range view allows the

business owner to better see what expenditures are needed to keep the company on a

growth track and stay ahead of competitors. The financial plan serves as a blueprint for

continual improvement in the company's performance. Spotting trends is crucial for

small business owners, as it helps them identify the most important expenditures that

bring about immediate improvements in productivity, efficiency, or market penetration.

This process is even used by even the largest, most well-capitalized corporations,

comparing the cost to the benefits of each proposed expenditure. Measuring progress is

also important for small business owners, especially in the early stages of their

ventures. Seeing that actual results are better than forecast provides encouragement
and a chart showing steady growth in revenues or a rising cash balance is a motivating

factor. The financial plan helps the owner see that the business is on its way to being a

success, providing clarity of hard data that helps the business grow and succeed.

The financial forecasting exercise aimed to assess the viability of new entrants in the

child restraints market in the Philippines. The proponents identified four established

companies from an international list, including Safe Ride News Publication and

Manufacturers Alliance for Child Passenger Safety Members, and identified four

companies based on market share and popularity in shopping malls and online

platforms. These four companies make up over 95% of the current total market. The

Securities and Exchange Commission provided financial statements for the fiscal years

2012 to 2015. A financial analysis was conducted for these companies, including

computations for return on equity, net profit margins, and financial ratios.

As stated in the study of Atienza et al., (2018), the financial forecasting exercise

suggests that current operating companies in the child restraint business in philippines

are stable and experiencing yearly growth. New entrants could be both profitable and

sustainable, potentially lowering the market price for child restraints and protecting more

children from traffic injuries and death. Road traffic injuries are a major public health

problem, accounting for 1.2 million deaths yearly and costing some countries 1-2% of

their gross national product. Child restraint laws are known to lead to increased use of

child restraint, making them an effective measure to reduce deaths and injuries among

children. It is crucial to enact and implement child restraint legislation in the Philippines,
including measures to increase and protect new companies in the market, ensure

everyone can afford a child restraint, and make every Filipino child safer in vehicles.

Cash Flow

According to Beaver (2021), cash flow is a measure of a company’s net cash

inflows and outflows. It’s reported in a cash flow statement, also known as a statement

of cash flows. When you want to measure a business’s financial health, one of the first

places to look is its cash flow. CFOs and finance teams must focus on increasing cash

flow and act quickly if it falls short of the level the company has determined is necessary

to maximize input and outflow. A business's cycle of cash inflows and outflows can be

seen by doing a cash flow analysis to examine the areas of the business that may have

an impact on cash flow. Investors and company executives can make the finest financial

judgments possible with the help of this study. The ultimate objective is to guarantee

sufficient cash flow and offer a cash flow management strategy.

As stated by Lasnick (2022), The cash flow statement’s impact on managing a

business is enormous. It tracks spending and forecasts near-term cash flow to meet

short-term goals. It informs long-term budgeting and it helps management prioritize

essential activities. The cash flow statement is a crucial tool in valuing a company and

understanding its operation. The cash flow statement is a reliable indicator of a

business's health, profitability, and prospects for the future. A cash flow statement is

significant in a business because it calculates the cash inflows and outflows for the

specified time period. The corporation uses this information to guide both its short- and

long-term planning. Additionally, it aids in determining the ideal amount of cash and

working capital that the business requires.

 Without a doubt, one of the most challenging parts of running a business is

handling its finances, especially for new and small- to medium-sized businesses

(SMEs). In fact, poor cash flow optimization is the reason behind 82% of small business

failures in the first five years, according to Visual Capitalist (2017). Cash flow

optimization, the business is more likely to be resilient in the face of natural challenges

such as pandemics, global recessions, and other unforeseen circumstances. Cash flow

optimization enables you to pay your invoices and expenditures on time and

consistently, enhancing your business' stability, reputation, and creditworthiness.

Investree.ph (n.d.)

Even though a business is making a respectable profit, it may go out of business

if unreported funds are being utilized to settle debt. The profit-or-loss statement does

not show how a firm uses cash to finance capital expenditures, increase inventory, or

give credit to customers. If the owner is just concerned with the bottom line, excellent

earnings may be hiding an underlying cash shortage and liquidity issue from view on the

profit-and-loss statement. As stated by Murcia (2018), cash flow is relatively (but not

completely) free of the drawbacks of the accrual concept; it is less likely to be affected

by variations in accounting principles and estimates, making it more useful than the

reported income in assessing liquidity and solvency. The cash flow statement can also

help business owners make financing and investing decisions. When owners decide on

the best approach to grow the business, they can use the cash flow statement to decide

how to fund their growth. Owners can opt to fund their growth through operations—if the

company generates enough cash flow from operations—finance it through debt or

equity, or both.
Sales

Great Learning Team (2021), defines sales as an activity between two or more

parties where the buyer receives a product, service, or assets in exchange for money.

Typically, sales are between seller and buyer, in which goods or assets are exchanged

for money or other assets. According to Tamplin (2023), sales are not only a basic

economic activity but also an integral part of business operations. It encompasses all

the processes involved in persuading and convincing a potential customer to purchase

a product or service. Sales is a broad and intricate field that involves much more than

just exchanging goods and services for cash. It's a thorough process that begins with

determining the needs of the consumer, moves on to providing the best solution, and

ends with the customer deciding whether or not to purchase.

According to Sethi (2023), sales play a crucial role in penetrating new markets

and expanding the customer base. Effective sales strategies enable businesses to

identify target audiences, build relationships with potential customers, and convert leads

into loyal clients. Sales teams may propel company success by gaining new clients and

capturing market share by comprehending the needs of their target audience and

skillfully conveying the benefits of their goods and services. Businesses may build a

solid basis for growth, remain ahead of the competition, and forge enduring

relationships with customers by realizing the value of sales and investing in efficient

sales methods. Achieving sustainable profitability and realizing the full potential of the

business requires the organization to embrace sales as a critical function.

 As stated by Coalson (2019), A strong sales team is crucial for a company to

ensure that they stay one step ahead. Enterprises that allocate resources towards

appropriate sales training initiatives show increased returns on their investments.

Training and development are essential if you want to guarantee steady growth and

leverage the ability, vigor, and experience of your present sales staff. There are several

advantages to sales training, particularly when it is integrated into hiring, onboarding,

employee and customer retention, and the sales process. Actionable sales training

programs can lead to better and higher closure rates of sales opportunities.

Offering discounts can have both positive and negative impacts on a company’s

profits. On one hand, discounts can attract customers and increase sales volume,

leading to higher revenue. An article created by TGG Accounting (n.d.), states that

discounting in accounting involves reducing the selling price of a product or service to

encourage customer purchases, but it can impact the overall profitability of a business.

However, because the discounted price lowers the total revenue per transaction,

discounts can also result in lower profit margins. Accounting for sales discounts is vital

for firms to make educated decisions about pricing and promotions. Businesses should

take into account elements including the cost of goods sold, marketing and promotion

costs, and the effect on consumer loyalty and repeat business when assessing the

financial impact of offering discounts.

Financial management on small business venture

According to Woodruff (2019), financial management is one of the most important

responsibilities of owners and business managers. They must consider the potential
consequences of their management decisions on profits, cash flow and on the financial

condition of the company. The activities of every aspect of a business have an impact

on the company's financial performance and must be evaluated and controlled by the

business owner. The majority of businesses incur losses and have negative cash flows

when they first launch. Effective financial management is crucial at this time. Even

though they are spending more money than they are bringing in during the first few

months of the business, managers still need to make sure they have enough cash on

hand to pay suppliers and staff. This means that in order to have a sense of how much

capital will be required to sustain the business until it turns a profit, the owner must

predict these negative cash flows financially.

As stated by Banupriya & Venkadesh (2019), financial management is one of the

functional areas of management that is critical to the success of micro and small

organizations. It is the management of a company's finances to meet its financial goals.

Financial management is a subsystem of overall firm management that is responsible

for administering financial processes such as financial planning and decision-making,

financial analysis, and control to attain an optimum level of funds. Because of the

importance of MSEs in economic development, the government has provided support in

terms of its promotion and development. The best financial outcomes are ultimately a

product of the various skills that financial management tactics foster. A company's

financial management operations are dependent on its behavior patterns and

application of financial planning knowledge. Insufficient experience in financial

management combined with market. Whether an owner manager or a hired manager,

environmental instability usually causes SMEs to have serious financial performance

problems. If poor financial decisions are made, the company's profitability will suffer.

Consequently, the profitability of SMEs may be jeopardized due to ineffective financial

control. MSMEs have always had difficulty because they lack the understanding

necessary for efficient financial management.

A study created by Nitto (2020) explores the financial management strategies that

successful small entertainment business owners have utilized to improve productivity

and profitability to sustain business in their first 5 years of business establishment and

beyond. After reviewing the study's findings, current and prospective small

entertainment business owners can use the three financial management tactics to

launch and maintain success. The study's findings led to the development of three

financial management strategies: (a) financing and financial management strategy; (b)

using accounting and company management software; and (c) varying sources of

income. Small business owners, both established and aspiring, can implement these

three tactics to boost profitability and productivity and maintain their enterprises.

According to Anoos et al., (2020), their study aimed to unveil the financial

management practices and challenges confronting the MSMEs in Danao City,

Philippines. The study revealed that the financial management system was moderately

practiced. It was concluded that the MSMEs management does not practice the

generally accepted standards on the financial management and control of the business,

which poses some threats to its sustainability considering that their predominant size,

the volume of assets, and revenue earned is low. The researchers highly advise local

government representatives to adopt a municipal ordinance emphasizing MSMEs'

crucial part in adhering to laws in order to enhance commercial dealings in regional

offices by utilizing the suggested position paper. Small business owners should be

aware that it may be difficult to establish well-designed controls with little funding. On

the other hand, if shortcomings are not fixed, the company may suffer losses and

hazards related to operations and finances.