Impact of Financial Management Practices on the Growth of Small and Medium Enterprises in South Africa

Abstract Book of the 10th International Conference on Research in Management

Year: 2026

[PDF]

Impact of Financial Management Practices on the Growth of Small and Medium Enterprises in South Africa

Prof. Dr. Ellen Chenesai Rungani

ABSTRACT:

Small and Medium Enterprises have been recognised as pillars of the growth of economy even in developed countries, they come up with innovations, create jobs, and rises a country’s GDP. However, South Africa is among the countries with the highest rate in SMEs failure with about five over seven of these businesses fail within their first five years. One of the challenges that these SMEs face is the absence of financial management. This study investigated the “impact of financial management practises on the growth of SMEs in South Africa”, targeting the Raymond Mhlaba Local Municipality SMEs. This study was guided by trade-off theory, cash conversion cycle theory, pecking order theory, and contingency theory. This study applied descriptive research design. For quantitative research, this study targeted a sample size of 228. Closed-ended questionnaires were then distributed to these SMEs and data was analysed using linear regression analysis. However, the results showed that cash flow management, working capital management, financial planning and accounting information systems have an impact on SME performance. The study recommended that SMEs should have financial planning and accurate record-keeping no matter how small the business is, transactions should always be recorded to enhance growth.

Keywords: Finance; SMMEs; Performance; Planning