Effect of Cash Management Techniques on Performance of Small and Medium Enterprises (SMES) in Nigeria

Abstract

Small and Medium Enterprises (SMEs) SMEs in Nigeria are experiencing major problems in controlling their financial activities especially in cash projections, budgeting and receivables control. These problems result in inefficient operations, problems with liquidity, and usually poor financial decisions. The chief aim of the study is to analyze the impact of cash management methods on performance of small and medium enterprises (SMEs) in Nigeria. The research used a quantitative design study and regression analysis on the data that was gathered on 396 SME owners and managers in Nigeria. The SPSS 23 was used to analyze the data to establish the correlation between the financial management practices and the operational performance. Study findings indicate that cash forecasting, cash budgeting, and receivables management variables are all found to possess a statistically significant positive influence on operational performance of the SMEs. Precisely, cash forecasting (p = 0.003), cash budgeting (p = 0.002), and receivables management (p = 0.005) were all discovered to play a significant role in enhancing the operational results. The findings indicate that proper financial management practices are vital in improving liquidity, decision making as well as sustainable growth of SMEs. The study suggests using the following recommendations based on the results: the SMEs in Nigeria ought to focus on the implementation of their effective cash forecasting, and reinforce their cash budgeting exercises to new heights and improve their strategies in managing their receivables. The practices will enhance financial stability, decrease uncertainty, and lead to the operational success in the long term.