CASH MANAGEMENT PRACTICES AND FINANCIAL PERFORMANCE OF SMES IN INDUSTRIAL DIVISION, MBALE.
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Date
2024-08-25
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Abstract
This study investigated the effect of cash management practices on the financial performance of SMEs in Industrial City Division, Mbale City, focusing on three specific objectives. The first objective was to examine the effect of cash flow forecasting on financial performance. The second objective was to establish the effect of the sales cycle on financial performance. The third objective assessed the effect of financial record-keeping on financial performance. The study used a descriptive research design adopting both qualitative and quantitative approaches of research.
The findings revealed that cash flow forecasting had a moderate effect on financial performance, with an R² of 0.147. The findings also showed that sales cycle contributed positively to financial performance of SMEs in industrial city division, with an R² of 0.160. Lastly, financial record keeping had a strong effect on financial performance of SMEs, with an R² of 0.481.
The study concluded that integrating robust cash management practices, including effective forecasting, sales cycle management, and financial record-keeping, was essential for enhancing financial performance. Recommendations included investing in advanced forecasting tools, optimizing sales cycle management processes, and adopting modern accounting technologies. Implementing these strategies would help SMEs in Mbale City improve their financial stability and overall performance.