Financial management practices and performance in Colombian and Mexican SMEs

Abstract

The lack of control through key performance indicators in Latin-American SMEs might inhibit their competitiveness. Objective: To evaluate the adoption of financial and non-financial indicators. Methods: exploratory research; considered surveys from 74 Colombian and Mexican SMEs (2018, 2020); we used a non-parametric test to compare differences. Results and findings: Before launching a business, Mexican SMEs did not give much attention to technical, financial, or market studies but invested more time in sanitation and social security permissions. Knowledge about interest rates or stocks returns was similar in both countries. Cash-in-hand and loans from friends mainly finance their operation due to high bank interest rates. Colombian´s loan application rejection rates were higher, which made them consider financing a significant constraint. Originality: between 40.5% and 68.9% of respondents do not adopt financial or non-financial indicators (mainly Colombians). Limitations: to increase the sample size according sectors and regions using random sampling is recommended.