Page 24 - IMDR MSME BOOK 2021

Managing Finance in Micro, Small & Medium Enterprises
Chapter 2
Review of Literature
The development of Micro, Small & Medium Enterprises
(MSMEs) has been imperative in bringing about a
thorough transformation in the economic structure of a
country. Unfortunately, the MSMEs have been facing
problems of industrial sickness during the past. The past
studies revealed that there have been many reasons for
the sickness or slow growth of the MSMEs, but the
nancial distress has come up as the most common
reason behind it. It causes disruptions in the production
and operations and weakens the nancial health of the
rm. Improper nancial management has been proved to
be the root cause of all other problems of an organisation.
The nancial management has got a base to the survival
and accomplishment of each business endeavours.
Unfortunately, several MSME proprietors have no
technical knowledge about nancial management and
have been uninformed of how this skill is signicant to
their business execution. The nancial mismanagement
troubles business productivity and hinders the
development of MSMEs. The vulnerability of the
business and absence of information of nancial
management drives MSMEs to signicant issues in
money related execution. One of the main constraints
that MSMEs face today is getting timely access to
nance. The availability of both long term and short-term
source of nance are the main challenges for MSMEs.
Hallberg (2001) argued that nancing for the SME sector
has emerged popularly in the recent few years and it has
become a debatable topic for the economists as well as
policymakers. This has become immensely important
because SMEs account for the majority of units of a
country and play a key role in employment generation.