Cash management practices and financial performance of small and medium enterprises in Pallisa town council

Abstract

The study was conducted to examine the effect of cash management practices on the financial performance of SMEs in Pallisa Town Council and it was based on three which included; (i) to examine the impact of cash control on the financial performance of SMEs, (ii) to determine the impact of cash planning on the financial performance of small and medium enterprises and (iii) to determine the effect of receivables management on the financial performance of small and medium enterprises in Pallisa town Council. The study adopted a cross-sectional research design and a quantitative approach to test the casual relationship and predict power of the in-dependent variable on the dependent variable. Data was collected from a target population of 90 and a sample size of 70 respondents of the 73 questionnaires distributed in Pallisa Town Council and analyzed using SPSS version 20 for both descriptive, correlation and regression analysis on the variables. Findings revealed that cash management practices which were measured through dimensions of cash planning, cash control and receivables management have a significant effect on the financial performance of SMEs. Findings showed that cash planning and cash control has a positive effect on the liquidity of a business whereas receivables management has a strong effect on the profit and cash sales growth. The researcher concluded that cash management practices dimensions of cash planning, cash control and receivables management have a direct and indirect significant effect on the financial performance of SMEs in PTC through having an effect on its dimensions of Liquidity, Profit growth and Sales growth.