Liquidity management and performance in SME’s; a case of Mbale municipality:

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Kampala International University, College of Economics and Management.
The purpose of the study was intended to establish the relationship between cash Management and performance of small-scale businesses in Mbale Municipality. The objectives of the study were to examine the effect of cash management on sales volume of small-scale businesses in Mbale Municipality, to establish the effect of cash management on profitability small-scale businesses and to examine the effect cash management no the duty of small scale businesses in Mbale Municipality. The study also reviewed some related literature in line with the study objectives. A case study design was adopted because it provided an in-depth study problem with in limited time scale. The study adopted random sampling with the aim of giving all business owners an equal chance of being chosen to participate in the study. Data collected from the field was edited, coded and categorized into themes. Thereafter. it was entered into the computer programme known as Statistical Package for Social Scientists (SPSS). The study found out that majority of the respondents (52.3%) agreed that they were not bank inn their daily cash from sales, an indicator of poor cash management. However on cash planning 29.6% of the respondents agreed that their cash inflows and outflows were always predetermined indicator of good cash management practice. on sales volume, majority of the respondents disagreed that they always made high volumes of sales, on the customer base, most of them disagreed that the customer was not big as such. on profitability, majority of the respondents disagreed that their profit margin was not always high. On liquidity, 65.9% of the respondents never paid their bills on time. an indicator of liquidity problems. On establishing the relationship between cash management and profit core of’ scale businesses, Pearson product correlation was used, it was revealed that R~O.853, P=O.0u5, adjusted R20.728. This implies that there is a strong relationship between cash management and business performance other factors as well do affect it. In conclusion, the study indicates that poor cash management that is through mishandling of cash from sales, easy access to cash by everybody affects both liquidity and profitability levels. However, proper cash management practices through cash planning, safeguarding will reduce on costs and idle cash hence improving performance of small-scale businesses. therefore the recommendation of the researcher on cash management and sales is that much emphasis should be on safeguarding of cash from sales through daily banking cash from sales proper record of sales to debtors, which reduces on bad debts. SSB and any other business should exercise proper cash management practices, through cash planning, safeguarding, in order to reduce operational costs and getting rid at’ excessive cash in business, if they are to achieve the time objective of profitability and liquidity.
a research report submitted to the college of economics and management in partial fulfillment of the requirement for the award of bachelor’s degree of business administration of Kampala international university.
Liquidity, management, Mbale municipality