Accounting Information Systems and Financial Literacy impact on SMEs' performance

Abstract

The COVID-19 outbreak has affected the economy, social, and politics of almost all countries in the world, including Indonesia. The economic impact was also felt by SMEs, during the pandemic there was a decline in production and sales resulting in a 61% decrease in income, and SMEs on average had capital problems. This study aims to empirically test the factors that can be used to improve the performance of SMEs. The predictors used to improve the performance of SMEs are accounting information systems, financial literacy, financial statement quality, and work experience. The population of this study was SMEs registered at the Magelang City Cooperative Service with the convenience sampling method. We surveyed 100 SMEs to find the determinants of the company's success during the pandemic. The data analysis of this research used Structural Equation Modeling Partial Least Square (SEM-PLS). The results showed that the main factor used to improve the performance of SMEs is the capital structure. An accounting information system is able to improve financial performance and financial literacy is a determinant of achieving predetermined performance standards. Quality financial reports will make it easier for users and encourage investors to channel their funds. Length of business is not a determinant of improving the performance of SMEs because business activities in the pandemic era are strongly influenced by the technological transition.