Short-Term Financial Management Practices and SME Performance in Ghana: A Case Study of Effutu Municipality

The study sought to examine the effect of Cash Management (CASH), Inventory Management (INV), Receivables Management (REC), and Payables Management (PAY) Practices on the Performance (PERF) of SMEs in the Efuttu municipality. The inquiry used an explanatory design and quantitative approach. By employing a purposive sampling technique to draw 130 SMEs and a Partial Least Squares-Structural Equation Modelling approach, the results indicated that all the short-term financial management practices had positive and significant effects on the performance of SMEs. The findings imply that ensuring sound short-term financial management practices could improve SMEs’ performance. The paper recommends that SME managers negotiate for payables days longer than REC days. The government is implored to institute tax incentives and soft loan schemes to encourage SME growth. The study brings new insight into the discussion on WCM practices and their effect on SMEs’ performance using primary data and non-accounting base measures.