Improving The Performance of SMEs through Financial Literacy and Information Technology: Accounting Reporting as Mediation

Small and Medium Enterprises (SMEs) are the simplest form of business that is easiest for people to do, and of course are the main drivers of national economic growth. The existence of SMEs supported by financial literacy, information technology, and accounting reporting can be a key factor in improving SMEs business performance. This study examines the effect of financial literacy and information technology on SMEs performance, with accounting reporting as a mediator. This study focuses on SMEs in West Java, using a sample of 100 respondents. Data were collected through surveys and questionnaires, and analysis was conducted using structural equation modeling (SEM) with SmartPLS software. The research findings reveal that financial literacy does not directly affect SME performance but positively affects accounting reporting. Conversely, accounting reporting and information technology have a direct positive impact on performance. These results indicate that increasing financial literacy in SMEs, and the use of information technology by SMEs, can improve SME performance. The existence of accounting reporting also functions as an important intermediary in improving SMEs performance. This study highlights the importance of integrating these factors to support the growth and sustainability of SMEs in West Java. Although it has a major positive impact on accounting reporting, financial literacy has little direct effect on SME success. Information technology has no direct effect on SMEs’ performance or accounting reporting, and accounting reporting has no discernible effect on SMEs’ performance. Information technology and financial literacy did not significantly affect SMEs’ performance, according to the accounting reporting mediation.