The impact of cash management practices on financial performance of SMEs in Uganda, a case study in Pallisa town council.

Abstract

The purpose of the study is to determine the impact of cash management practices on the financial performance of SMEs in Pallisa Town Council. The objectives of the study were; to examine the effect of cash control on the financial performance of SMEs in Pallisa Town Council, to examine the effect of cash conversion cycle on the financial performance of SMEs in Pallisa Town Council, and to examine the effect of cash planning on the financial performance of SMEs in Pallisa Town Council. The study contains these sections: theoretical review, conceptual review variables which contains cash management on profitability, and it will also discuss empirical review, critique of literature and research gap. The researcher used descriptive and explanatory research designs to ascertain and describe the characteristics of variables and explain the occurrences of the problem. The population was comprised of 87 individuals from which the researcher obtained a sample of 41 respondents comprising of 20 owners and 21 employees. The research process used purposive sampling in order to select respondents with specific desired information. Data was collected from both primary and secondary sources. The researcher interpreted and discussed the presented data in frequency tables and SPSS to analyze data from frequency tables. The coefficients table provides us with the necessary information to predict cash planning from financial Performance, as well as determine whether cash planning contributes statistically significantly to the model by looking at the Sig column. In conclusion Cash planning was found to be necessary in all SMEs in Pallisa Town Council. Since cash control could be used to explain 69% influence in a financial performance of SMEs in Pallisa Town Council. More importantly organizations should encourage cash control, cash conversion cycle and cash planning in cash management to improve on financial performance in SMEs in Pallisa Town Council. Further the study recommends that cash management practices should be well practiced in any SMEs to ease the financial performance through cash control, cash conversion cycle and cash planning.