The Impact of Records Keeping on the Financial Performance of Small and Medium-scale Business, a Case Study of SMEs in Kisinga Town Council in Kasese District, Western Uganda
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Date
2025-06-12
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Uganda Christian University
Abstract
The purpose of this study was to examine the effect of record keeping on the financial performance of small and medium scale enterprises (SMEs) in Kisinga Town Council in Kasese District, Western Uganda. The study was guided by three main objectives: (i) to identify the kinds of records that SMEs keep, (ii) to examine the record keeping challenges that SMEs face, and (iii) to assess the link between record keeping and financial performance. The study employed a descriptive research design and used a mixed approach with qualitative and quantitative data collection methods through the use of questionnaires and interviews. In total, 40
SME owners and managers were surveyed. A stratified random sampling approach to selecting the respondents was applied to ensure that different sectors (retail, manufacturing, and services) were included. Data analysis was conducted using
Statistical Package for the Social Sciences (SPSS) with descriptive statistics.
The results indicated that while only some SMEs keep essential financial records including cashbooks, general ledgers, and income statements, for a large number of them, record completeness and accuracy is often a struggle. To be precise, significant barriers impacting effective record keeping included lack of accounting knowledge, cost of a professional bookkeeper, time to keep records, and the
informal nature of many businesses in the region. There was also a significant positive relationship between correct record keeping and increased financial performance, meaning that SMEs with proper records are more likely to find and track profitability, control costs, and access for loans. Barriers to effective record keeping were noted, including business owner illiteracy, fear of being taxed, no formal financial management training, and inadequate financial literacy. The study adopted an approach to improve financial literacy, digitize as it is more affordable, provide access to formal financial methods, and enhance the performance of the SME. Suggestions includes training programs specifically in record keeping, support by the government to formalize the many informal businesses, and designing simpler accounting tools to assist small businesses in their efforts to improve financial recordkeeping
Description
Undergraduate