Working Capital Management and Performance of Smes in Uganda a Case Study of Ugachick Poultry Breeders Limited

Abstract

This study examines working capital management as the independent variable and performance of SMEs in Uganda as the dependent variable. The specific objectives of the study were; to find out the effect of Accounts receivable on performance of SMEs in Uganda, to assess the role of Accounts payable on performance of SMEs in Uganda and to establish the relationship between Cash management and performance of SMEs in Uganda. The study used a case study research design with quantitative and qualitative research techniques using a total sample size of 54 respondents. Data was collected using self-administered questionnaires and face to face interviews. In summary, the findings from the study revealed that majority of the respondents relatively agreed that the debtors pay on time as evidenced by the mean of 3.108 despite the fact that, some clients normally take longer time to pay back. The study revealed that most of the respondents agreed that they make delayed payments to their creditors without damaging our relationship with them as seen by the mean of 4.28. It was also revealed from the study that the purchases made on credit do not affect the cash flows of the business in addition to the fact that they get goods quality goods on credit with a hope of paying later. The findings revealed that cash management is done to avoid interruptions in operations as seen by the mean of 4.584. The findings also showed that cash management is done mostly in times of price fluctuations and that cash Management is done to reduce supply costs. The study concluded that not all the debtors of SMEs pay on time despite that fact that most products sold on credit to attract new customers. With working capital management, most SMEs have been able to realize profits for entity relative to total assets maximize sales revenues and improve competitive advantage. SMEs have been able to innovate new products, adopt new technologies and also achieve new working capital management techniques and generally working capital management in SMEs is seen to affect their performance in Uganda. This is evidenced from the ability of accounts receivables, accounts payables and capital management towards the contribution to the performances. If management doesn’t have a good relationship with the suppliers, they could end up not receiving goods when needed therefore it is recommended that management should have a system to ensure there is a functional system for effective working capital that is management should pay on time to develop better relationships with suppliers and are in a position to negotiate better deals. Finally, it is recommended that the businesses should take full advantage of creditor payment terms. Business entities should employ a good collection system that will issue quick, clear, and accurate data debt on collections activity.

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