Between September and October, the Federal Revenue Service notified 1,121,419 individual microentrepreneurs (MEI) and 754,915 micro and small companies that had debts with Simples Nacional, at risk of being excluded from this tax regime next year if they do not regularize their debts. This scenario of default may have a strong influence from the lack of financial organization, as shown by a recent survey conducted by Ceape Brasil (Support Center for Small Enterprises) to understand how Financial Education is present among micro-entrepreneurs. According to the survey, 69.7% of respondents claim to have had problems honoring their business commitments, including paying suppliers or employees. And when possible, family bills are put on the back burner, as declared by the remaining 29.3%.
“The Brazilian macroeconomic scenario alone is challenging for Brazilian entrepreneurs. We still have a high interest rate and low economic growth. But the main challenge is the entrepreneur’s own preparation. Often, people do not control revenues and expenses and do not have basic knowledge in finance to make strategic decisions that can lead to the longevity or failure of the business,” explains Claudia Cisneiros, executive director of CEAPE Brasil, which specializes in providing productive microcredit, combining loans with financial education for borrowers.
Another data from the research that draws attention is that only 54.1% of entrepreneurs usually separate personal accounts from business accounts. Of the total sample, 5.4% of respondents said they saw no point in separation. Another 25.2% said that sometimes they need to reallocate personal resources to the business and vice versa, and another 15.4% noted that they ‘do what they can,’ meaning they cannot have two distinct managements because the accounts do not match.
Claudia Cisneiros believes that, in general, Brazilian entrepreneurs already understand the importance of having good financial education to sustain a business, but many things are still done in a disordered manner. ‘It seems cliché, but the concept of ‘finding a way’ is very present when we talk about managing small businesses. Before, it was more common for people not to make any daily balance of their expenses and panic to ‘balance the account’ in the last days of the month. Today, most already understand that it is important to control as a form of prevention, but they dismiss the assistance of a accounting professional, for example,’ says.
Self-Criticism
The diagnosis of the majority (33.5%) is that the lack of organization to make payments is their main financial mistake, followed by payment conditions that were not properly assessed (27.7%). 22.7% had problems for ‘buying things on emotional impulse,’ without evaluating the future impact. The rest (16.1%) pointed out that the wrong choice of payment source or financing has caused trouble.
Concerning the control of revenue versus expenses, the data obtained shows a worrisome situation: 9.1% of entrepreneurs claim they control everything in their heads, and another 7.9% say they don’t use any form of control. Among those who take a closer look at their cash flow, 7% rely on what their accountants say, 14.5% use spreadsheets, and another 61.6% use a notebook to balance their accounts.
The survey was conducted with 242 micro and small entrepreneurs who are clients of Ceape Brasil. Present in Maranhão, Pará, Tocantins, Ceará, Piauí, Pernambuco, Alagoas, São Paulo, Bahia, and Rio Grande do Sul, the institution has 21 thousand active clients, meaning those with ongoing loans. Ceape specializes in granting productive microcredit, combining loans with financial education for borrowers and has already granted over R$ 7.4 billion in credit, benefiting around 1.5 million entrepreneurs, mainly in the Northeast region.
