COMPLETE SCHOOL PROJECT TOPICS & MATERIALS :
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CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Small and Medium Sized Enterprises (SMEs) are often the main driving force of a country’s economic growth and development (Okechi & Kepeghom, 2013). There is no universal definition of SMEs that is widely accepted as the definition is dynamic and depends largely on a country’s level of development (Aruwa & Gugong, 2007; Apulu, 2012). Varying definitions amongst countries may arise from differences in organizations at different levels of economic development. For example, the Department of Business, Enterprise and Regulatory Reform (BERR) (2009) uses the following definitions: Micro firm: 0-9 employees; Small firm: 0-49 employees; Medium firm: 50-249 employees; and Large firm: over 250 employees. In Nigeria, the Small and Medium Sized Development Agency of Nigeria (SMEDAN) defines SMEs based on the following criteria: a micro enterprise as a business with less than 10 people with an annual turnover of less than ₦5,000,000.00, a small enterprise as a business with 10-49 people with an annual turnover of ₦5 to 49,000.000.00; and a medium enterprise as a business with 50-199 people with an annual turnover of ₦50 to 499,000.000.00.
Extant literature revealed that most SMEs in Nigeria die within their first five years of existence, a small percentage goes into extinction between the sixth and tenth year while only about five to ten percent survive. Over the years researchers have also revealed some of the major problems faced by SMEs to be incomplete records, lack of finance, poor power supply, staff inexperience amongst others. In Nigeria for example, power supply is a huge problem for various firms not just SMEs alone and as a result of this inefficiency of power supply funds spent on electricity becomes overbearing for most organizations. Of all the challenges faced by most SMEs, incomplete records seem to be a very fundamental problem of SMEs as it affects stakeholders with respect to making informed decisions. Prior to the 21st century, most organizations adopted the traditional method of recording transactions, which of course involved too much paperwork and was very time consuming. As a result of this, some of the records prepared by their accountants were not usually complete and as such, users of accounting information were not able to make informed decisions. These and many more problems faced in the course of using the traditional method of recording transactions birthed the financial technology. Financial technology (Fin-tech) is defined as any technology that assists in capturing, processing and transmitting information electronically (Apulu & Latham, 2009). SMEs have with time seen the positive impact that fin-tech, such as computer terminals, e-mail, internet and their applications can have on their business. According to Organization for Economic Co-operation and Development (OECD), in advanced OECD countries, most small firms, including micro-enterprises with fewer than ten employees, now have at least one computer terminal, usually with Internet access. Many types of business software can improve information and knowledge management within the firm, leading to better business process and better and efficient performance of the firm.

The introduction of financial technology such as invoice.ng has made available new technology like software accounting packages which have made accounting process very easy and time saving. But since adopting financial technology in most SME’s, it is still a known fact that accounting records are still not complete. As a result of this shortcoming, stakeholders find it difficult to rely on accounting information from SME’s in making effective decisions. This has raised questions such as: Is there any relationship between fin-tech adoption and accounting system of SME’s? This study therefore intends to examine the role of Fin-tech in facilitating basic accounting practices in SMEs.

1.2 Statement of the problem
Globalization and its offspring, hyper competition, uncertain environment, demand for quality services and above all rapid advances in technology have necessitated that organizations especially banks change their usual or traditional way of doing business.
In Nigerian banks today, the still exist considerable use of papers and files to consummate financial transactions instead of adopting the modern technology. The result is slow rate of banking operations, which will greatly affect the output. In that case, there are still congestion of customers at banks’ counters. Customers are still seen forming longer queue than necessary resulting in a lot of time being wasted by these cusotemrs, which has created negative impressions by the customers on the particular bank. Moreover, there are still high rate of fraudulent practices among bank employees and bank chief executives who have taken the advantage of inadequate availability or provision of financial technology equipment or lapses in the system to perpetrate crimes in order to achieve their selfish desires to the detriment of the particular bank. Above all, poor and slow management decision making and information dissemination still exist in the system and this has greatly affected output and will invariably affect the turnover as information that is timely or that is out of date is useless.

1.3 Objective of the study
The main objective of this study is to examine the role of Fin-tech in facilitating basic accounting practices in SMEs. Specifically, the study sought to
1. To examine how crucial financial technology is, to SMEs.
2. To examine the factors responsible for the lapses experienced in SMEs.
3. To determine whether SMEs realize the tremendous advantage that may accrue following investment on financial technology.
4. To examine the constraints and challenges information technology may face in SMEs.
5. To suggest solutions where possible to problems/lapses which may be encountered in using fin-tech.
6. To determine how fin-tech will encourage proper planning, proper decision-making and proper management in the banking sector through systematic or formalized way of handling information.

1.4 Research questions
1. How crucial is financial technology to SMEs?
2. What are the factors responsible for the lapses experienced in SMEs?
3. Do SMEs realize the tremendous advantage that may accrue following investment on financial technology?
4. What are the constraints and challenges information technology may face in SMEs?
5. What are the possible solutions to problems/lapses which may be encountered in using fin-tech.
6. How can fin-tech encourage proper planning, proper decision-making and proper management in the banking sector through systematic or formalized way of handling information?

1.5 Significance of the study
This study is calculated to create an awareness of Financial Technology a modern tool for effective and efficient business management. The researcher cast his mind back when most business activities went on without any knowledge of or exposure to Financial Technology. Certainly, the picture was good to the operators because there was nothing to compare their situations with. The picture under analysis portrays a sluggish, mutilated and unreliable network of business connections. Nobody will be in a better position to appreciate the significant of fin-tech in business than the executive who had the opportunity to span the two performances.
In summary, the study has broadened the horizon of the researcher on issues concerning information technology and its application in the business world especially the banking industry. This will help to educate management on the need to invest in fin-tech considering the tremendous advantages that may accrue from such investment.

1.6 Scope of the study
This study is carried out on the role of fin-tech in facilitating basic accounting practices in SMEs. This study focuses on invoice.ng.