The Role of Budgeting in Improving the Financial Performance of MSMEs
DOI:
https://doi.org/10.5281/Keywords:
Budgeting, Financial Performance, MSMEs, Financial Management, Financial LiteracyAbstract
Budgeting plays a pivotal role in enhancing the financial performance of Micro, Small, and Medium Enterprises (MSMEs) in Indonesia, a sector critical to national economic growth and employment. Many MSMEs rely on informal financial practices, leading to inefficiencies in cost management, cash flow control, and strategic planning. This study employs a systematic literature review to examine theoretical frameworks, empirical findings, and practical budgeting applications relevant to MSMEs. The synthesis indicates that simple, structured, and user-friendly budgeting practices, combined with managerial competence and financial literacy, significantly improve operational efficiency, profitability, and long-term business stability. External support, such as training programs, digital financial tools, and government initiatives, further facilitates effective budgeting implementation. Importantly, this study addresses research gaps by identifying practical budgeting models suitable for micro and small enterprises with limited resources and technological access, providing actionable recommendations for practitioners and policymakers to enhance MSME financial performance and resilience in a dynamic business environment.
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