The Effect of Record-Keeping on Financial Performance of Small and Medium Scale Enterprises in Uganda in Lira City

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International Journal of Research and Innovation in Applied Science (IJRIAS) | Volume VII, Issue V, May 2022 | ISSN 2454–6194

The Effect of Record-Keeping on Financial Performance of Small and Medium Scale Enterprises in Uganda in Lira City

 Okello Apollo
Department of Accounting and Finance, Uganda Martyrs University P.O. Box 5498 Kampala (U)

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Abstract: The study sought to examine the effect that Record-keeping could have on financial performance of SMEs in Lira city. The researcher used both descriptive and correlational design. The study adopted a quantitative approach. The researcher used simple random sampling in selecting 118 SMEs operators in the service sector that formed the sample size of the study. A structured questionnaire was used as the main instrument of quantitative data collection from the selected SMEs Operators. Completed questionnaires were edited, coded, and entered into and categorized into themes and analyzed using SPSS 20 for Windows. Bivariate analysis in form of Pearson’s product moment correlation was used to show the direction and strength of the relationship between each dimension of Record-keeping and financial performance. Regression analysis was also used to test the effect each construct of Record-keeping on financial performance. The study therefore concludes that Record-keeping has effect on financial performance of SMEs and recommends proper record filling, retention and retrieval in order to improve financial performance of SMEs.

Key Words: Record-keeping, Financial Performance, small and medium enterprises.

I. INTRODUCTION

The current growth of most economies globally is premised on small and medium enterprises (SMEs) financial performance (Fanen & Avanenge, 2020). Small and medium enterprises play significant roles of creating employment, driving innovation and entrepreneurship, reducing poverty and other social challenges in both developed and developing countries (Wenzhen & Nik-Intan, 2021).
In the developed economies such as the European Union, almost 85% of jobs are created by SMEs (Pandy, 2019) . In India SMEs constitute over 90% of total enterprise of the economy (Pandy, 2019). While in Nigeria, they employ over 84.02% of the labour force both in the formal and informal sectors (Mutesigensi, Eton, Ebong, & Mwosi, 2017; Niwemutoni, Mulyungi, & Jaya, 2018). With such enormous contribution to economies, it is no long a debatable fact that SMEs are significantly contributing to economic growth of many developing economies.
In Uganda, SMEs account for more than 90% of the private sector businesses, and they are regarded as the engine for income generation, wealth creation, poverty reduction through job creation, and innovation (Ssempala, 2019; UBoS, 2020