ABSTRACT
This chapter examines through the literature the application of performance measurement in Small and Medium Size Entities (SMEs). However, when addressing issues relating to SMEs, it is necessary to consider the important question of the definition of a SME. The European Commission's definition of SME referred to earlier details three metrics: employment, total balance sheet value and total turnover. A business entity performance measure should be designed to evaluate the extent to which the strategic objectives of the entity are being achieved. Performance measurement can be very influential in ensuring that a business's corporate strategy is successfully embraced. The legitimacy of choosing a methodology to investigate the performance measurements used in SMEs will differ depending upon the number of issues. Cash flow indicators were also perceived by owner-managers as significant from the perspective of the bank and creditors. Accountants play an important role in advising their SME clients in the process of the adoption of performance measures.
