Understand financial statements, small entrepreneurs told-A A +A
Monday, July 28, 2014
THE microfinance industry in the Philippines, recognized as one of the developed industries in Asia, is geared towards uplifting the economic status of the Philippine economic society, a business leader noted.
Regan Rex King, vice president of the Cebu Chamber of Commerce and Industry (CCCI), said the extension of capital assets to micro, small and medium enterprises (MSMEs) reduces the economic vulnerability of the micro-small entrepreneurs and is seen as a means to attain sustainable poverty reduction in the country.
He said this at a seminar-workshop on financial management for MSMEs at the Bangko Sentral ng Pilipinas (BSP) last week.
Gary V. Maningo, head of the BSP department of loans and credit, is said that no matter how small a business, the owners must have an understanding of financial management.
He said the key elements in financial management are understanding and analysis of the financial statement, financing the business, budgeting resources, and management of company assets.
He noted that some small and medium businessmen just hire accountants to prepare the financial statement for compliance to the Bureau of Internal Revenue (BIR) or for banks where they are applying for loans, but they don’t read and analyze whether they are making profit or not.
He said that in a financial statement, owners and managers can make important decisions while prospective investors can assess the viability of investing in a business through the financial statement.
“Did you read and analyze your financial statement? How did you know that you are earning?” Maningo asked the participants.
Maningo said that every businessman must focus on internal operations and expenses. If no bank will lend funds to a company, something is wrong.
“We have to first make our business profitable before we can promote savings,” Maningo
Vice Mayor Edgardo Labella, who spoke on behalf of the Cebu City Government, said that in the past, parents told their children to go to school, get good grades and find a good job. “Now, parents say go to school, get good grades and find a good business.”
“With the help of BSP and other financial institutions, we will be able to develop a financially-independent community. Without overlooking education as a key factor to financial success, we may develop a culture of entrepreneurship among the people,” Labella said.
Published in the Sun.Star Cebu newspaper on July 29, 2014.