The Role of Cash Management on Performance of Financial Institutions a Case of Pride Microfinance Limited

Abstract

The purpose of the study was to establish the role of cash management on performance of financial institutions using a case of Pride Microfinance Ltd. The specific objectives of the study were; to assess the effect of cash control on performance of financial institutions, to establish the role of cash collection on performance of financial institutions and to find out the function of cash budgeting on performance of financial institutions.

The study used a case study research design with quantitative and qualitative research techniques using a total sample size of 43 respondents. Data was collected using self-administered questionnaires and review of bank records.

The study revealed that, Cash control enables verification, with complete nature and accurate recording of all cash that is received and also be able to establish the financial position of the organization as a result of proper cash handling procedures. It also provides assurance of the dependability of the accounting data used in the decision making of the organization.Furthermore, Cash Collection has provided greater investment opportunities with larger sums of money available as surplus and that collection procedures used have helped increase the amount of money at hand to meet current obligations. In addition, Cash Budgeting has assisted managers in the planning for borrowing and investment facilitates to control expenditure and that the cash budgets are often used to assess whether the entity has sufficient cash to fulfill regular operations. Cash Budgeting has also helped the organization to know the value of certain expenditures that can yield opportunities for additional savings by cutting unnecessary cost.

Finally, it is recommended that During budgeting, Workflow, thresh holding and data management tools, should be taken as priority since they can improve consistency and highlight focus areas for additional attention, but most organizations fail to use them effectively. It is recommended that the Businesses should manage their Accounts Payable, in other words they should take full advantage of creditor payment terms, and use electronic funds transfer to make on-time payments on the last day they are due. They should consider both price and payment terms when choosing suppliers, as well as whether early payment discounts will reduce your overall vendor costs.

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