TRAINING ON THE IMPLEMENTATION OF STANDARD OPERATING PROCEDURES (SOP) AND DIGITAL-BASED FINANCIAL RECORDING TO BUILD INNOVATION CAPABILITIES OF MSMES IN LANCANG GARAM VILLAGE, LHOKSEUMAWE

Abstract

Problem Context: Micro, Small, and Medium Enterprises (MSMEs) in Lhokseumawe play a vital role as the backbone of the regional economy. However, this sector still faces substantial challenges in terms of internal management, particularly related to unstandardized Standard Operating Procedures (SOPs) and manual financial recording practices. These governance inadequacies are exacerbated by regional economic pressures, including inflationary volatility that demands highly accurate margin efficiency. These issues hamper accountability, access to formal capital, and limit MSME Innovation Capabilities. Intervention Objective:This Community Service (PkM) activity aims to improve MSME operational efficiency through knowledge transfer and assistance in the implementation of simple SOPs, as well as improve financial accountability through the adoption of digital-based financial recording (Digital Financial Literacy). Specifically, this program is aimed at establishing the structural foundations necessary forpartner MSMEs to have higher Innovation Capability. Method: This study uses a Participatory Action Research (PAR) approach conducted in three structured stages: preparation (initial needs identification), implementation (interactive training, demonstrationof mobile recording applications, and hands-on practice), and evaluation (measuring literacy improvements through pre- and post-tests). Participants consisted of MSMEs in Lancang Garam Village, Lhokseumawe. The evaluation results showed a very significantincrease in digital financial literacy scores and understanding of SOPs. Partner MSMEs demonstrated a high level of adoption of digital financial recording applications and were able to prepare simple profit and loss reports in accordance with SAK EMKMprinciples. The implementation of SOPs and financial formalization collectively increased managerial confidence and created a measurable foundation. Implications: This PkM intervention proves that process standardization (SOPs) and digital financialaccountability are fundamental prerequisites that must be met before MSMEs can effectively move towards Innovation Capabilityand increased bankability (access to People's Business Credit/KUR).