Financial Management Practices of Medical and Laboratory Equipment Trading in the National Capital Region

Abstract

Considering the importance of the financial management practices in businesses, SMEs role in the economy of the Philippines and significant contribution of Medical Device Sector in the economy, the main objective of the study was to understand the level of effectiveness of the financial management practices of SMEs engaged in Medical and Laboratory Equipment Trading as basis of action plan to improve and develop these specific practices that essentially contributed to the achievement of the financial goals of the companies. This study covered Financial Planning, Accounting Information System, Financial Reporting and Analysis, Cash Management, Receivable Management, Inventory Management, Payable Management, Fixed Asset Management, Tax Management, and Audit and Internal Control. This used descriptive research method and survey questionnaire as its primary research instrument. A total of four hundred thirty two (432) company respondents chosen using purposive sampling, consisting of the owners, managers, chief accountants and other personnel involved in finance related functions, were obtained for the assessment of the financial management practices. In this study, it was found out that SMEs prioritize complying with statutory requirements being tax management, audit and internal control and accounting information system ranked highest among the aspects. Fixed asset management was the least effective aspect. While the rest of the aspects which are operational by nature got an overall effective rating, there are practices under these which pose concerns that need to be addressed. Notable concerns amongst others are being lowly computerized, lack of training of the personnel, higher priority on selling more on credit and maintaining high level of inventories. It is recommended that SMEs invest in the training of the employees, implement cost effective Computerized Accounting System and establish a system to regularly evaluate customer, vendors, inventories and fixed assets to minimize related financial risks.