The present study examines the incorporation of benchmarking into management accounting practices in small and medium-sized firms (SMEs) in Kerala. It focuses on solving the significant deficiencies in knowledge, implementation, and customized strategies that are unique to this particular area. The article examines the internal and external challenges that SMEs encounter. It emphasizes the pros and cons in implementing benchmarking effectively due to constraints in resources, skills, and opposition to change. The study examines the influence of benchmarking on performance evaluation and assesses the efficacy of several benchmarking tools and approaches accessible to SMEs. The research seeks to uncover best practices and offer recommendations for improving benchmarking skills in small and medium-sized enterprises by providing empirical analysis and analyzing the study variables – resource allocation, performance evaluation, quality initiatives, management support and increased organizational productivity. The results enhance the comprehension of how benchmarking can be successfully included into the management accounting practices of small and medium-sized enterprises in Kerala, thereby enhancing their performance and productivity.