Impact of cash management practices on the performance of the small-scale start-ups

Abstract

The study investigated the impact of cash management practices for the business performances of the small scale startups. The research focused on seven key cash management practices; cashflow forecasting, accounts receivable management, accounts payable management, inventory control, maintenance of cash reserves, budgeting and cash flow monitoring. These practices have been checked using qualitative methodology. Semi structured interviews were conducted with 20 small scale startup founders. Analysis of collected information reveled that implementation of the cash management practices positively influenced on liquidity, operational efficiency and profitability of the businesses. Nevertheless, level of adoption of such practices significantly varied based on the financial literacy, access to tools and willingness to financial discipline as well.