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Mopolayio: Journal of Economic Service

Volume 3, Number 1, November 2023 E-
ISSN: 2808-8883
Homepage:https://mopolayio.fe.ung.ac.id/index.php/mopolayio

Cash Management Guidance for Small, Micro and Medium Enterprises

Mattoasi1
1Department of Accounting, Faculty of Economics, Gorontalo State University, Jl. Gen. Sudirman
No. 6 Gorontalo City, Gorontalo 96128, Indonesia
E-mail:mattoasi@ung.ac.id 1

Article History: Abstract:

Received: 19 – 11 – 2023 Cash management guidance is intended to produce
Revised: 28 – 11 – 2023 business people, especially at the MSME level, who can
Accepted: 29 – 11 – 2023 manage cash effectively and efficiently within the
organization so that they can ensure that business capital
needs are well met in every operational activity. This service
is intended to provide business actors with an
understanding of both theory and practice regarding Cash
Management. The methods used are lectures and practice.
The results of the service show that MSME business actors
can understand how to manage cash well and can plan cash
Keywords:Management
sources and their use in the form of a cash usage budget.
Cash, Effectiveness,
The implications of this service can be a guide for MSMEs in
Efficient, Budget Use
planning the use of cash.
Cash, MSME Players

Introduction
Micro, Small and Medium Enterprises (MSMEs) are one of the productive businesses
owned by individuals or business entities that meet the criteria for being a micro enterprise.
This sector has proven capable of improving the economy in Indonesia when the economic
recession hit. MSMEs have been able to absorb the number of workers as a solution to
reduce the number of unemployed people because they can be absorbed therein. Likewise,
Handayani & Almaidah (2023) and Ismail (2023) and Rochmaniah (2020) stated that MSMEs
are a source of the economy and can also create jobs. This is also in line with Devra
Gartenstein (2019) that small businesses provide opportunities for entrepreneurs to
develop themselves based on the type of business they manage.
In Indonesia, MSMEs contribute a workforce of 117 million workers or 97% of
the workforce absorption capacity of the business world (Ministry of Finance 2020).
Meanwhile, the contribution of MSMEs to the national economy is 61.1%, and the
remaining 38.9% is contributed by large business actors, whose number is only 5,550 or
0.01% of the total number of business actors (Ministry of Finance, 2022). This growth,
according to Mulyani (2014), states that most MSMEs grow from family industries either
individually or in groups with consumers from the lower middle class. It has been
proven that when the economic crisis occurred due to the Covid-19 outbreak, MSMEs
were more consistent in surviving than large companies. Therefore, according to
Fitriyyah, Rif'atul-As'adi & Sularsih (2020) and Khairunnisa et,al (2020) and Budiman et
al, (2017) stated that MSMEs are businesses that contribute to economic development.
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in Indonesia because the MSME sector has been proven that apart from being able to create jobs, it
can also increase people's income.

Based on several descriptions that have been put forward, it is also in line with
McKinsey andInternational Labor Office(2015) stated that MSMEs make an important
contribution to job creation and income generation and that they account for two-thirds
of all jobs in the world. Therefore, according to Domingo Ribeiro Sariango (2017) and
Maharani & Rita (2020) and Putri & Musmini (2013) that MSMEs must remain consistent
in maintaining several things, namely, apart from surviving to gain profits, they are also
expected to maintain cash flow to ensure liquidity. the company is getting better. This
situation is also expected to occur in MSMEs in Kabila Bone District, Bone Bolango
Regency.
MSME players in the Bone Bolango area also still experience several
obstacles apart from limited capital, they also still have very limited access to
consumers because of the quality of the products managed so that the condition of
existing MSMEs has been trying to develop but it has not yet fully happened. Apart
from that, MSMEs also have cash planning that is not yet effective, making it
difficult to maintain better business liquidity which will ultimately impact the
organization's ability to achieve profits at any time (MSME Financial Notes, 2023).

Based on the background and phenomena that have been stated, the
formulation of the problem in service is: How is cash management in MSMEs in
Kabila Bone District, Bone Bolango Regency. Meanwhile, the aim of the service is
to find out how to manage cash in MSMEs and provide solutions for managing
business cash. It is hoped that the benefits of this service will provide
understanding to business actors at the MSME level in managing the
organization's cash and the results of the service will contribute to the service's
thoughts in developing MSMEs.

Method
The implementation of this service begins with collecting data and information regarding
types of MSME businesses, especially in Kabila Bone District and the problems they face.
However, information was obtained from their financial notebooks that cash management for
MSMEs had not been planned carefully.
Based on this phenomenon, this service begins with preparing a proposal and proposing
it to the UNG Faculty of Economics and Business through the Accounting Department. After the
proposal is received, the service team gathers business actors and provides material regarding
the importance of managing productive MSMEs with better cash management because good
cash management can be carried out due to transaction motives; precautionary motive and
speculative motive. The use of cash is based on aspects of consumer needs so that every cash
investment will be more effective and targeted, so that the business continues to run to support
the achievement of the organization's vision. The success of service is measured based on the
percentage of MSME players who have skills in cash management.
Then in this service, MSME business actors are trained to make a cash budget
which includes cash receipts and cash disbursements and procedures for effective
use of cash. In addition, participants were trained to record receipts and
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cash disbursements based on existing reporting standards.

Results

This service is intended to provide provisions to business actors in managing their cash,
both for cash receipts and cash disbursements. From the results of the service through lectures
and cash management practices carried out and followed by a question and answer session
between participants and resource persons, it shows that cash management for MSME actors in
Kabila Bone District. From the daily cash administration side, as an orderly administration of
cash receipts and disbursements as well as the final cash balance, cash reports have not yet
been madeup to datewhich can provide information regarding the structure of cash receipts,
cash disbursements and the latest cash balance when needed. This is important because it can
be useful for assessing a company's ability to generate cash and allows users to develop models
to assess and compare the present value of future flows from different companies.

Regarding cash management, the service team in this service explains that
before spending begins, the cash that is owned must have a plan for what priority
spending will be for the needs of the local community so that the goods purchased
can be sold smoothly at a predetermined price. Apart from that, the servants
explained that the price and quality of goods purchased for resale must compete
with other MSME products, and the same goes for other businesses such as pricing
cottages on the edge of Botutonou beach, Kabila Bone District, Bone Bolango
Regency. This activity is as shown in Figure 1.
Figure 1.
Explanation of Cash Administration in Financial Planning

Source: Botutonou Village, 2023

Cash flow is expected to be in accordance with organizational conditions,

especially for MSME players in Kabila Bone District. This is important because mistakes
in spending cash will have an impact on the organization's liquidity level. Regarding this
matter, the staff conveyed the importance of a cash budget both in purchasing goods
and selling goods as well as the costs that will be incurred in each transaction. A budget
is an illustration of predictions of future cash receipts and expenditures. When
preparing a cash budget, the owner needs comprehensive information regarding
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the desired time and amount of cash flow both incoming and outgoing in a certain
period.
Preparing a cash budget can be done periodically, either weekly, monthly or
annually. The key is the level of precision in predicting sales numbers. The cash budget
will later be useful for analyzing economic activities so that they run well and smoothly
in accordance with the company's desired goals. Regarding this matter, it is as
explained by the following servants.
Figure 2
Process for Submitting Material Regarding the Cash Budget

Source: Botutonou Village, 2023

Strengthening cash management in addition to carrying out proper financial administration

better and with appropriate financial planning, it is also necessary to determine the
security of cash balances for each business period. Post-Covid-19 conditions are a major
concern for MSME actors to prepare goods for various needs for the community in the
Kabila Bone District Area, especially in Botutonou Village. In ensuring the security of
cash balances, every financial manager always tries to ensure that there is a well-
ordered cash flow within the company. Balancing both incoming and outgoing cash
flows is very important. The reason is, excessive cash conditions orexcess cash balance
will cause profitability to be disrupted. Profitability is caused by insufficient or
unproductive cash/cash. On the other hand, if there is a cash shortage, the company
cannot operate properly and cannot fulfill obligations that must be paid immediately
(Unlikwid). Thus, companies must prepare cash according to their needs. This can be
seen from Figure 3.
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Figure 3.
Post explanation of cash management training for MSME players

Source: Botutonou Village, 2023

Discussion

Based on this dedication, it shows that cash management in each MSME is

not carried out optimally so that cash expenditure is often ineffective, because the
cash management method used is still conventional and does not determine cash
expenditure based on priorities. This shows that spending is not based on planning,
which sometimes causes cash to be unsafe and has an impact on business capital.
After the service was carried out, MSME players were shown how to create better
cash management so that planning and the position of cash owned could be carried
out effectively and efficiently.
Effective cash management can help MSME players in the process of every
transaction, both receipts and expenditures. The results of this service are in line with
Handayani & Almaidah (2023) and Ismail (2023) and Devra Gartenstein (2019) Which
said that good cash management will have an impact on better organizational
planning. Likewise, the results of a study by Rochmaniah (2020) state that a better
cash budget will make it easier for organizations to secure their current assets,
especially cash.
The results of this service also support the results of Mulyanti & Supriyani
(2018), that the availability of cash in the organization can make it easier for leaders to
make financial plans. This service also provides support to Fahmi (2013) in his research
that every cash transaction must be planned well so that the organization's financial
ratios are better maintained.
The results of this research are also in line with Domingo (2017), Rochmaniah (2020) that
effective cash management can fulfill organizational productivity. Likewise, this research
supports the research results of Maharani & Rita (2020) and Puspitaningtyas
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(2013) That good MSMEs must manage the organization effectively and efficiently so
that they can manage resources better. The results of this research are also in line
with Putri & Musmini (2013) that cash management influences business profitability.

Conclusion
Based on the results of the service, it shows that MSME players can carry out cash
management for their business by preparing a plan for cash sources and their use. It is
recommended that cash management be implemented in managing the organization.

Recognition/Acknowledgements

Based on the service that has been carried out, the service would like to thank
the Faculty of Economics and Business, Gorontalo State University for supporting us
in carrying out the service. Apart from that, the servant would like to thank the village
officials in Kabila Bone District for all their support as well as the Micro, Small and
Medium Enterprises (MSMEs) actors.

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