Problems and Solutions in the Digitalization of Accounting in Small and Medium-Sized Enterprises (Smes)

The digitalization of accounting in small and medium-sized enterprises (SMEs) has moved beyond a narrow software issue and now directly affects managerial control, reporting quality, and tax compliance. Properly designed digital accounting systems improve the speed of transaction processing, widen access to timely financial information, strengthen document traceability, and make internal control more consistent. Yet SMEs rarely move to this model without friction. In practice, the transition is often slowed by fragmented systems, weak data quality, limited staff capability, resistance to new routines, cyber-risk exposure, and the perception that implementation costs are difficult to absorb. This article examines the main barriers to accounting digitalization in Azerbaijani SMEs, relates them to the logic of IFRS for SMEs, and proposes staged solutions that are realistic under SME resource constraints. The study is based on literature review, analysis of institutional and regulatory documents, and interpretation of the 2024 KOBIA survey. The survey shows that ERP use remains limited at 12.2%, while cloud technology adoption is even lower at 6.8%, suggesting that digitalization is still largely fragmented rather than process-integrated. The article offers a structured barrier taxonomy, a tool-to-reporting alignment perspective, and a phased roadmap for SME-oriented digital accounting reform.