Cash flow management practices: An empirical study of small businesses operating in the South African retail sector

Abstract

The small, micro and medium business enterprises (SMMEs) sector is universally acclaimed for fostering economic growth in many economies. The health of this sector is largely premised on the observance of prudent financial management tenets, mainly cash flow management. In this study we interrogate the influence of cash flow management practices on the survival or growth of the SMMEs by conducting a survey amongst the SMMES operating in the retail sector of Pretoria in South Africa. We find evidence that cash flow management is extremely important to the survival of a business, particularly small businesses, and poor cash flow management can also lead to small business failure. We also proffer policy advice as to the remedial actions needed to safeguard this sector.