Paper Title
Exploring Financial Capability of SMES and Improving Financial Management Performance Using Financial Application

Lack of Financial capability of small-medium enterprises SMEs) potentially lead to problems disturbing performance and growth of SME in Indonesia. This lack also triggers the loss of their competitive advantage. This problem arises from the less of financial literacy and capability for managing finance. Consequently, they get difficulty to access financial institutions to get funding, and cannot develop their business well. The objective of this research is to identify financial capability within SME’s and design application tools to facilitate their financial management. Using qualitative methods, this research interviewed 60 entrepreneurs in Eat Java producing local prominent products. Questionnaires were used to measure SME business performance and financial capability such as financing decision, investment decision and profit management. Triangulation was used by confirming the interview data, quantitative data and FGD data. Statistic descriptive was used to analyze the data resulting that 80% of SME has good business performance. Their current sales grew more than 10%. This growth rate can be increased if they have eagerness to take a risk by investing more for increasing their production to penetrate markets. In more detailed way, it was identified the lack of SME knowledge and management on preparing financial record, loss-profit report, cash report, and assets. One of the research’s outputs is a financial software compatible with PC, laptop, and mobile phone. This software is use full for SME owners to manage theirs financial business. Key words- financial literacy, financial capability, financial system