Cash Management Practices and the Performance of Small and Medium Enterprises in Mitooma District, Uganda

Abstract

Small and medium enterprises (SMEs) in Mitooma District frequently manage irregular receipts, seasonal demand, immediate payment obligations, and limited financial records. This study examined the relationship between cash management practices and SME performance in the district. A descriptive cross-sectional survey was conducted using a concurrent mixed-methods design. From a population of 836 enterprises, 271 SME owners or managers were selected through proportionate stratified and simple random sampling, alongside 20 purposively selected key informants. All 271 questionnaires were returned. Quantitative data were analysed using descriptive statistics, Pearson correlation, and simple linear regression, while interview accounts were analysed thematically. Respondents reported moderate use of cash management practices (M = 3.42, SD = 0.87). Cash management was positively associated with SME performance (r = .616, p < .001) and accounted for 38.0% of the variance in performance (R² = .380; adjusted R² = .378). The regression coefficient was statistically significant (B = .310, SE = .024, β = .616, t = 12.842, p < .001). Interview evidence situated these results within enterprises experiencing irregular income, seasonal shifts in demand, unplanned expenditure, and inadequate cash reserves. Daily monitoring of receipts and payments was common, whereas formal budgeting and systematic recordkeeping were less consistent. The findings identify cash-flow timing, expenditure control, and liquidity reserves as operational conditions associated with SME performance. SME owners should institute routine cash budgets, transaction records, and reserve policies, supported by financial-management training.