Effect of Financial Management Practices on the Performance of Small and Medium Enterprises (SMEs): A Case Study of Kampala Central Business District
Year: 2026
Type: article
Abstract: This study examined the effect of financial management practices on the performance of small and medium enterprises (SMEs) in Kampala Central Business District, Uganda. Given the critical role of SMEs in employment and economic growth and their high failure rates, the study investigated how working capital management, financial record-keeping, budgeting, and access to finance affect business performance measured in terms of profitability, sales growth, and survival. A descriptive and explanatory cross-sectional design with a mixed-methods approach was adopted, and data were collected from 150 SME owners and managers using structured questionnaires and interviews. Descriptive statistics, Pearson correlation, and multiple regression were used for analysis. The results revealed a strong positive and significant relationship between financial management practices and SME performance (r = 0.67, p < 0.01), with the practices jointly explaining 51.4% of the variance in performance (R² = 0.514). Working capital management and financial record-keeping were the strongest predictors. The study concludes that sound financial management practices significantly enhance SME performance and recommends training, adoption of proper record-keeping, and improved access to finance.
DOI: 10.68598/mjamr.724
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W7223676489