Exploration of financial management practices of small and medium scale enterprises in Twifo Hemang lower Denkyira District

Abstract

Small and Medium Scale Enterprises offer immense contribution to the economic development of Twifo Hemang Lower Denkyira District and Ghana as a whole.The dominance of small and medium scale enterprises in Twifo Hemang Lower Denkyira District and in Ghana as a whole is as result of minimum capital requirement, easy formation, use of indigenous raw materials, localized operation, less gestation period and most above all profit motives. It is anticipated when proper financial management education or support extended to them, they will stand a better chance of developing their capacities and be able to expand. This will have direct and positive effects on the economy of the communities and thus enhance the livelihood of the people involved. This study was conducted to find out the effects of financial management practice on small and medium scale enterprises in the Twifo Hemang Lower Denkyira District. This was to identify the financial management practices employed by SMEs and broadly examine the effect of the financial management practices on the SMEs. The research was conducted under both qualitative and quantitative research design and a simple random sampling was used to select hundred (100) SMEs from the Twifo Hemang Lower Denkyira District area councils. It was revealed that most SMEs managers do not understand what financial management is and those who do employ financial management techniques use rudimentary approach in managing the finances of the SMEs. The study recommends that financial institutions whose targets are SMEs should offer some level of education and training for SME management.