Financial Management Practices and Performance of SMEs in Ghana: The Moderating Role of Firm age

Abstract

This study examines the moderating effect of firm’s age on therelationship between financial management practices of SMEs and their performance in Ghana. This paper relied on a sample of 200 SMEs in the Sekondi-Takoradi Metropolis using random sampling without replacement technique (random numbers). The study employed descriptive cross-sectional survey design. Ordinary least square regression analysis modelwas used to test the relationship between financial management practices and SMEs performance. The results show that receivable management, cash management, inventory management and asset management practices influence SMEs performance. Also, firm’s age has a moderating effect on the relationship between financial management practice and SMEs performance.This implies thattime (age) enables firms to develop organizational routines to be able to perform their activities with more efficiency and which may better their performance.It is recommend that SMEs should incorporate good financial management practices such as credit management, cash management, inventory management and asset management in their operations.