Effects of cash management on financial performance of SACCOS in Pallisa town council.

Abstract

This study examined the effect of cash management on financial performance of SACCOS in Pallisa town council. The study was directed by the following objectives, which included examining the influence of the cash conversion cycle on financial performance, assessing the effect of cash planning on financial performance, and investigating the effect of cash controls on financial performance. The study utilized a cross-sectional research design and a quantitative technique. Data were gathered from 40 participants in from 10 active SACCOS in Pallisa town council. Data were collected using a closed-ended questionnaire, and data were analyzed using Statistical Packages for Social Sciences, yielding frequency tables, descriptive statistics (mean and standard deviation), reliability, validity, correlation, and regression results. According to the study's findings, the cash conversion cycle has a positive and significant effect on financial performance, as does cash planning and cash controls. The report proposes that efforts to improve financial performance be focused on cash management (cash conversion cycle, cash planning, and cash controls). Finally, the study recommends that, SACCOs should improve their cash conversion cycle (CCC) management by reducing the time required to convert resources into cash flows. This can be accomplished by promptly collecting receivables from members, arranging attractive credit terms with suppliers, and minimizing unnecessary delays in processing member loan repayments. In addition, they should adopt effective cash planning methods that connect predicted inflows and outflows with their strategic and operational goals by precisely estimating member contributions, loan disbursements, and operational expenses. Finally, SACCOs should implement cash budgets as a management tool to track and compare actual and planned cash flows, which allows management to discover deviations, impose financial discipline, and make timely adjustments to spending objectives, as these can ensure the best use of financial resources, resulting in increased profitability and long-term financial stability for the SACCO. The study finally concludes that all the facets of cash management such as cash conversion cycle, cash planning, and cash controls are essential for robust financial performance of SACCOS in Pallisa Town Council.