IMPACT OF EFFICIENT CASH MANAGEMENT IN THE FINANCIAL PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES (SMEs)

Abstract

This research paper examines the impact of efficient cash management on the performance of Small and Medium Enterprises (SMEs) in the north coastal districts of Andhra Pradesh. The study involves both primary and secondary data analysis and seeks to elucidate the direct correlation between cash management techniques and SMEsperformance. Small and Medium Enterprises (SMEs) play an important role in any economy as they can generate employment, promoting the growth of Gross Domestic Product (GDP), embarking on innovations, and stimulating of other economic activities.

The SME sector is said to be the backbone of all developed and developing nations. The development of the SME sector is of paramount importance for any country irrespective of their level of development since this sector has immense potential to generate maximum socio-economic benefits to the country with the minimum level of investment. The available statistics indicate that a vast majority of the small and medium scale industries die within their first five years of their existence and a few firms go into between the six to ten years of existence. It may be noted that only 5 to10 percent of the small and medium enterprises can survive, thrive, and grow into maturity stage. The reason for this is not an only capital shortage but may be improper cash management practices.

In this paper, an attempt is made to analysethe cash management practices in small and medium enterprises. It is a descriptive study with a structured questionnaire from a sample of 360 which includes 346 small and 14 medium scale enterprises in Visakhapatnam, Srikakulam and Vizianagaram districts