Small business financial management practices in North America : a literature review

An extensive review is presented of the empirical research into small business financial management previously conducted in North America. Evidence indicates that financial practice among small firms has not experienced any significant change over the past 15 years. In contrast to the amount of information available, the actual use of financial reports by owner-managers is rather limited. One study found that slightly over 50% of respondents seldom or never compared their firm's performance with industry figures. The results of accounts payable management practices studies have shown that less than half of small business owner-managers view accounts payable as a source of finance for their businesses. Recent studies imply that about 20% to 30% of small businesses engage in some form of budgeting. Additional small business research is particularly needed in such areas as accounting systems, working capital management, fixed asset management, financial reports, and managerial planning and control.