The effect of financial management practices on the financial performance of small and medium enterprises :

Abstract

The study examined the aspect of the financial management practices on the financial performance of small and medium enterprises in Pallisa Town Council. The objective of the study was to determine the effects of capital budgeting techniques on the financial performance of small and medium enterprises, to determine the effects of budgetary controls on the financial performance of small and medium enterprises and to determine the effects of financial leverage on the financial performance of small and medium enterprises. The study used a descriptive research design with a population of 45 SMEs and a sample of 40 was drawn from financial services, wholesale and retail shops, information communication and technology, agriculture and drug shops and a questionnaire was employed in the collection of data. However, the study aimed at finding out whether financial management practices has impact on the financial performance of small and medium enterprises a case study of Pallisa Town Council. The findings showed that there was a positive effect of capital budgeting techniques on the financial performance at (r= 0.996, F=583.242, p<0.05), budgetary control on the financial performance at (r=0.994, F= 2747.198, p<0.05) and investment monitoring on the financial performance at (r=0.989, F=1342.382, p<0.05). This therefore shows that there was a positive effect of financial management practices on the financial performance of small and medium enterprises in Pallisa Town Council. However, the study further recommends that a further study should be carried out to investigate the challenges facing successful implementation of financial management practices and the study also recommends further studies on organizations in other sectors of economy so as to enable generalization of the study findings.