Accounting Information System and Financial Performance of Manufacturing Firms in Kenya

Abstract

The integration of financial technologies has become a critical factor in enhancing the financial performance of firms across various industries. This study explores the role of financial systems, including cash ledger systems, data management platforms, automated payroll systems, and accounting information systems (AIS), in improving operational efficiency, accuracy, and financial decision-making. Through an extensive literature review, the study assesses both the benefits and challenges associated with adopting these technologies. Findings indicate that financial technologies contribute to streamlined financial reporting, improved compliance, and enhanced strategic planning. However, small and medium-sized enterprises (SMEs) in the manufacturing sector face significant challenges, including high implementation costs, technical skill gaps, and resistance to technological change. Additionally, existing research tends to focus on large corporations, leaving gaps in understanding how SMEs can effectively implement and benefit from financial technologies despite resource limitations. The study underscores the need for industry-specific research on financial technology adoption, particularly in developing economies, where firms often struggle with financial constraints and regulatory complexities. Future studies should explore phased implementation strategies, cost-effective technological solutions, and the long-term financial impact of adopting digital financial systems. By addressing these gaps, firms can develop tailored approaches to technology adoption, ensuring sustainable growth and improved financial performance.