The Role of Digital Technology in Improving the Efficiency of Financial Management of Micro, Small and Medium Enterprises and Its Impact on Business Development

Abstract

Micro, Small, and Medium Enterprises (MSMEs) in Indonesia play a crucial role as the foundation of the country's economy, contributing significantly to Gross Domestic Product (GDP) and creating numerous jobs. However, MSMEs often face various challenges in their financial management, including ineffective manual record-keeping, difficulties in directly monitoring cash flow, inconsistent financial reporting, and a lack of access to formal financing. These challenges often hinder their growth and sustainability in an increasingly competitive market. This study aims to deeply analyze the innovative role of digital technology in improving operational and strategic efficiency in MSME financial management and evaluate its positive impact on MSME business development in Indonesia. A descriptive qualitative method was used to gain a deeper understanding of this phenomenon. Data were obtained through a combination of in-depth literature review, interviews with MSMEs in Makassar who have actively used digital solutions, and direct observation of their digital financial management practices. The results of this study consistently demonstrate that the implementation of digital technologies, such as cloud-based accounting applications, electronic banking, and digital payment platforms (QRIS, e-wallet), has significantly increased efficiency. This can be seen in the automation of transaction recording that occurs quickly and accurately, more transparent cash flow tracking, and automatically generated financial reports. This increased efficiency has a positive impact on the ability of MSMEs to make more informed business decisions, expand access to financing, and ultimately, significantly accelerate the growth and competitiveness of MSME businesses. The findings of this study emphasize the need for continued support from the government and technology providers to facilitate the digital transformation of MSMEs to achieve inclusive and sustainable economic growth.