The Impact of Record Keeping On the Performance of Selected Small and Medium Enterprises in Lagos Metropolis

The importance of Small and Medium Enterprises (SMEs) in many economies cannot be over emphasized as they play vital roles in the economy of both developed and developing countries such as employment generation and poverty reduction among others. However, majority of SMEs have failed to recognize the importance of well-structured accounting system that would have enabled them keep accurate financial statement. The study set out to analyse the extent to which accounting information is being used to measure the financial performance of SMEs. Questionnaires were administered to 200 SMEs owners out of which 197 questionnaire were valid and analysed using Likert scale. It was observed that while respondents agree that major benefits of keeping proper records is to know the performance of the business and that record keeping is key to the success of the business, majority of the SMEs owners lack basic accounting knowledge and decry the cost involved in preparing financial statement hence they keep the records themselves manually. The study recommends that SMEs operators should endeavour to keep proper records and where necessary seek the services of SME professionals to do so at minimal cost because the cost involved in business failure as a result of lack of proper record keeping far outweigh the cost of good record keeping for a business concern.