Influencing Factors of Effective Cash Management: A Survey of SMEs in Malaysia

Small and Medium Enterprises (SMEs) constitute a significant segment of Malaysia’s economy, contributing substantially to employment and economic growth. However, numerous challenges impede the optimal efficiency and development of SMEs. Cash management emerges as a critical concern due to its crucial role in SME financial health and sustainability. Poor cash management can hinder growth, increase vulnerability to economic fluctuations, and ultimately threaten survival. This study investigates the determinants of effective cash management in SMEs, focusing on training, accounting skills, and cash planning. A quantitative approach was employed, gathering data through a 5-point scale questionnaire administered to 116 SMEs in the Klang Valley region. Descriptive analysis was conducted using the questionnaire data, followed by hypothesis testing through Multiple Regression Analysis. The findings underscore the significance of training, accounting skills, and cash planning as pivotal factors influencing effective cash management within SMEs. Specifically, SMEs with comprehensive cash planning frameworks, employees equipped with fundamental accounting skills, and robust training programs demonstrate enhanced cash management efficacy. In light of these results, the study recommends that SMEs prioritize the establishment of robust cash planning protocols, recruit personnel proficient in basic accounting principles, and invest in comprehensive training initiatives to bolster their cash management practices. By addressing these factors, SMEs can fortify their financial resilience and facilitate sustainable growth in Malaysia’s dynamic business landscape.