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Budgeting and Financial Techniques Used by SMEs during Crisis

Journal of Commerce and Accounting Research

Volume 12 Issue 3

Published: 2023
Author(s) Name: Jacques Hendieh | Author(s) Affiliation: Graceland University, United States.
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Abstract

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The COVID-19 pandemic topped the financial and economic crisis faced by small and medium-sized enterprises (SMEs) in Lebanon. The purpose of this article is to explore the budgeting and financial techniques used by the Lebanese SMEs during the crisis, using an exploratory and qualitative approach to discuss the impact of the crisis on the techniques used. Data collection involved sending questionnaires to the managers of 133 different SMEs. Results have shown that a low number of financial management techniques are used, while most SMEs tend to abandon their prior budgeting techniques. The usage of financial techniques is related to financial literacy and could be explained by the tendency to focus on short-term profitability and liquidity. We found that younger and more educated managers have a higher tendency to use more techniques. Managers are encouraged to rely on budgeting and financial techniques to increase their survival chances. Long-term planning can be a powerful tool to avoid reactive strategic behaviour. Managers need to anticipate environmental constraints using different scenarios or by testing the robustness of strategic initiatives using diverse tools like financial planning and control.

Keywords: Management Accounting, SMEs, Crisis

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