Working capital management practices of small and medium enterprises in the Sekondi-Takoradi Metropolis

Abstract

This study was conducted on selected businesses in the Sekondi-Takoradi Metropolis of the Western Region of Ghana with the purpose of assessing the practices small and medium enterprises (SMEs) in the metropolis adopt in managing their working capital through the use of the descriptive research design. A sample of 300 respondents was chosen using the stratified random and purposive sampling techniques from a population consisting of entrepreneurs and their employees responsible for managing their firms’ working capitals. The resulting data which was gathered using interview guide was analysed using statistical techniques such as means, percentages, Chi-square and reliability analyses. It was found out that most of the businesses were not engaged in strong cash management practices though most of them were operating bank accounts. Their inventory management practices, were found to be fairly good with most coming short at preparing budgets for their different types of inventory. The study recommends that owners and managers of the SMEs should ensure that there is regular and frequent physical stocktaking of inventories; introduce and improve the ICT systems of their businesses to enhance their operations; train their staff on ICT devices and the latest industrial technologies; and formulate, keep and implement well-documented polices on providing services or selling products on credit. It is recommended that, owners and managers of the SMEs should ensure that physical stocktaking of inventories are conducted regularly and frequently, while introducing information and communication technology systems of their businesses.