Effects of cash flow management on financial performance of small and medium scale businesses:

Abstract

This study examined the effect of Cash flow Management on Financial Performance of Small Scale Businesses in Kampala central division. The study was guided by the following objectives notably, to examining the impact of auditing on financial performance of medium scale businesses, to establish the impact of budgeting on financial performance of medium scale businesses and to establish the impact of record keeping on financial performance of medium scale businesses in Kampala Central Division. The study used a cross sectional research design and a quantitative approach. Data was collected from a target population of 100 of Small-Scale businesses with accessible unit of 70 operators of Small-Scale businesses, using simple random and purposive sampling techniques. Data were collected with the aid of closed ended questionnaire and Statistical Packages for Social Sciences was employed for analyzing data from which frequency tables, descriptive statistics (mean and standard deviation), reliability, validity, correlation, and regression results were obtained. The study findings revealed that there is a positive and a significant effect of auditing on financial performance, budgeting on financial performance and record keeping on financial performance of medium scale businesses in Kampala Central Division. The study concludes that there is a strong predictive power that the dimensions of cash flow management contribute towards enhancing financial performance of Small Scale businesses. Finally, the study recommends that efforts to improve on the financial performance of Small-Scale businesses depend on cash flow management (auditing, budgeting and records keeping).