Accounts Receivable Management Practices and Financial Performance of Small and Medium Enterprises in Kisii County

Purpose: The study focused on assessing the relationship between accounts receivable management practices and financial performance of small and medium enterprises in Kisii County. Methodology: Descriptive was used because it allows for contextual interpretation and understanding of the subject under consideration. The study's population consisted of small and medium-sized enterprises in Kisii County. The estimated target population was 240 SMEs. The research used appropriate data collection instruments and procedures. Findings: The findings reveal that all four practices significantly influence financial performance, with collection practices and risk assessment practices having the strongest impact. Specifically, SMEs that adopted effective collection strategies, such as using aging reports and regular follow-ups, as well as those that formalized credit risk assessment processes, reported better financial outcomes. Financing practices like factoring and using receivables as collateral also enhanced financial performance, while extension practices such as credit scoring models and internal rating systems contributed to improved profitability, albeit to a lesser extent. Unique Contribution to Theory, Policy and Practice: The study recommends that SMEs invest in improving their accounts receivable management practices and explore modern financing and risk assessment tools. This research contributes to the understanding of accounts receivable management in the SME sector, particularly in Kisii County, and offers insights for both practitioners and policymakers seeking to enhance financial outcomes for SMEs in the region.