Financial Management Practices and Performance of Enterprises Funded By the Youth Enterprise Development Fund in Voi Sub-County, Kenya
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Financial management is a major influence and success measure in all the enterprises across the world. Financial management usually entails sourcing of finances and the management of the same and generation of reports to report of such. The process of financial management includes sourcing of funds, cash management, bookkeeping, and reporting. It’s through reporting that enterprises are aware of their performance. The major tenets of financial management include: efficient and effective usage of enterprise’s resources; accountability to the various enterprise stakeholders; long term sustainability of the enterprise through effective forecasting and sales growth; achievement of the financial goals of the enterprise and or gain competitive advantage over the competition. The general objective of the study was to investigate the effect of financial management practices on the performance of enterprises funded by YEDF in Voi Sub-County, Kenya. The study objectives were to examine the effects of cash management, financial planning, financial reporting and bookkeeping on the performance of enterprises funded by YEDF. Theories anchoring the study included Baumol’s Model of Cash Management and Pecking Order Theory. A cross-sectional study research design was used. The target population constituted the 550 individuals involved in the management of the 112 youth enterprises. The respondents were Managers (Senior and operational level) and General staff members. The sample size was 55 respondents comprising of 22 managers who were selected through simple random sampling technique. The study used questionnaires to collect primary data and secondary data was collected from financial statements of the YEDF and published articles. Quantitative data was computed for both descriptive statistics and inferential statistics and the results presented in tables, figures, graphs and bar charts. The qualitative data on the other hand was first grouped into subcategories, analysed using content anal technique and reported in narrative form. The study concludes that enterprises funded by YEDF have challenges in managing their cash since it was found that they have not embraced and implemented efficient cash management practices in their business operations. This was shown in their low means of the efficiency levels in cash their limited application of theories of cash management in their operations. They have weaknesses in integrating financial planning and control into financial management limited the perceived value of the financial planning process within the organization. They applied financial standards in ensuring accountability of finances in the organizations for the purposes of proper financial planning and they do not keep complete accounting records because of lack of accounting knowledge and the cost of hiring professional accountants. As a result, there is inefficient use of accounting information to support financial performance measurement by them. The study recommends that Enterprises funded by YEDF should adopt computerized accounting packages to help improve their efficiency in cash management. The government should come up with a policy on sound financial planning measures which can be integrated into the financial management system as financial planning is an integral part of financial management which deals with the management of a firm’s funds with a view to maximizing profit and the wealth of shareholders. It is the primary responsibility of YEDF directors and officers to ensure that the funded enterprises are accountable for their programs and finances to the contributors, members, and the public and government regulators and also it is recommended that more bookkeeping consultancy firms that provide bookkeeping advice should be opened up throughout the country to facilitate better bookkeeping amongst youth enterprises.