MJAMR

Relationship Between Cash Management And Financial Performance Of Small Business Enterprises In Main Market, Arua City.

Kitakufe Takiu, Kabanda Richard


Abstract

The study investigated the relationship between cash management practices and financial performance of small business enterprises (SBEs) operating in Main Market, Arua City, Northwestern Uganda. The research was necessitated by high business failure rates attributed to poor financial management and liquidity challenges among small enterprises. A cross-sectional survey design was employed, collecting data from 156 SBE owners and managers through structured questionnaires and interviews. Quantitative data were analyzed using descriptive statistics, Pearson correlation, and multiple regression analysis. The findings revealed a significant positive relationship between cash management and financial performance (r=0.814, p<0.01). Regression analysis demonstrated that cash management practices explained 66.3% of variance in financial performance (R²=0.663, F=51.289, p<0.001). Specific results showed that cash flow planning (β=0.418, p<0.001), receivables management (β=0.356, p<0.01), and cash control systems (β=0.298, p<0.01) were significant predictors of financial performance. Businesses with formal cash budgets reported 47% higher profitability and 52% better liquidity ratios compared to those without. The study concluded that effective cash management was critical for SBE survival and growth, with cash flow planning being the most influential factor. Key recommendations included: adopting formal cash budgeting systems, implementing credit policies to manage receivables, maintaining optimal cash reserves, utilizing mobile money and digital payment platforms, and participating in financial literacy training programs. The research contributed to the understanding of financial management practices in informal market settings and provided practical guidance for entrepreneurs and business development service providers seeking to enhance SBE performance in Uganda's regional urban centers.

Keywords

Cash Management Financial Performance Small Business Enterprises Cash Flow Working
Metropolitan Journal of Academic Multidisciplinary Research

Cite This Article

Kitakufe Takiu & Kabanda Richard (2025). Relationship Between Cash Management And Financial Performance Of Small Business Enterprises In Main Market, Arua City. Metropolitan Journal of Academic Multidisciplinary Research, 4(12). https://journals.miu.ac.ug/pages/article.php?article_id=542

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