An Assessment Of Cash Flow Management In Private Enterprises Operations In Nigeria

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An Assessment Of Cash Flow Management In Private Enterprises Operations In Nigeria


Chapter One


Introduction

1.1 Background Of Study

Cash flow management is a critical component of financial management and the hub around which any organization’s operations spin. Cash is the most important current asset for the functioning of a business, according to Pandey (2004), and it is thus seen as the basic input required to keep a business running on a daily basis. As a result, currency has become the lifeblood of each business. Effective and efficient cash management will, without a doubt, have a positive impact on the organization’s short-and long-term goals and objectives. By balancing the cost and benefit of maintaining cash, cash flow management requires a corporation to maintain an adequate amount of cash balance. However, there are no straightforward guidelines that govern the amount of cash a company should keep on hand for a short call to the bank. However, in order to prevent shortfalls in satisfying obligations and liquidity problems, a company must establish the optimal cash balance to be retained at any given time. In Nigeria’s current economic downturn, private company survival must be assured. To put it another way, the careful financial management of a company’s cash resources in primus inter pairs must be investigated. The management of cash is extremely important.to the management of a company Failure to manage cash flow in a tight scenario could put a company’s viability in peril. In recent years, many private businesses have experienced major cash flow problems as a result of inadequate financial management. Fraud, cash theft, illiquidity, and insolvency are among the most annoying issues that many private businesses face today. Poor cash management, which leads to fraud, illiquidity, and insolvency or bankruptcy, as the case may be, is the biggest source of failure for many private enterprises in Nigeria today, according to experience and study (Akinyomi, 2014). It’s rather depressing to see that, after so many years of doing business in Nigeria, many business owners and managers still wonder what cash is. What do we do with cash that is either too much or too little? What are the causes of insolvency and illiquidity? How can any liquid cash be managed to generate the best possible returns? in order to provide realistic solutions to the topic, as well as to the current business cash dilemma. According to Jeffery and Charles (1997), cash traps and cash flow can be an issue even when a small business has a large number of clients, provides a great product to its customers, and has a good reputation in the industry. In the event of unplanned expenses, a company with a cash flow crisis has no margin of safety.


1.2 Statement Of Problem

According to CIMA (2005), managing cash flow is a constant challenge for private businesses since they pay little attention to it and hence miss the impact of cash shortages on capital turnover and business operations. Inability to generate cash from its operations may require it to borrow additional money or sell off its capital investments to pay its obligations, but this condition may lead to involuntary bankruptcy if it persists over time, according to Amuzu, (2010). Most businesses, according to Mbonyane (2006), have cash flow problems as a result of slow moving or excessive stock, which leads to poor stock or inventory management; too generous credit terms; cash spent on unprofitable products or services; and unnecessary expenditure (money spent on buildings, houses, and luxury)


1.3 Objective Of Study

The following are primary objectives of this study:

  1. To identify the primary cause of poor cash flow management in private enterprises.
  2. To investigate several methods for assisting private enterprises with efficient cash flow management.
  3. To evaluate strong financial records and bookkeeping in order to improve cash flow management in private enterprises.

1.4 Research Questions

  1. What are the primary causes of poor cash flow management in private enterprises?
  2. What are the methods for assisting private enterprises with efficient cash flow management?
  3. What are the strong financial records and bookkeeping that will improve cash flow management in private enterprises?

1.5 Significance Of Study

This study will provide a comprehensive understanding of the cash flow management function of private organizations to its many readers. It will also raise awareness of the importance of efficient cash flow management among our private enterprises. It will also serve as a foundation for future research into other aspects of cash consumption in private enterprises. The study will benefit businessmen, entrepreneurs, and organizations in particular by exposing them to possible cash flow management aid strategies. This research is also likely to be beneficial to business consultants. Because it would provide them with a clear understanding of how private businesses use their limited resources efficiently


1.6 Scope Of Study

This study focuses on identifying the primary cause of poor cash flow management in private enterprises. They also investigate several methods for assisting private enterprises with efficient cash flow management. Lastly, to evaluate strong financial records and bookkeeping in order to improve cash flow management in private enterprises. This study is delimited to Iroko TV, Lagos state.


1.7 Limitation Of Study

Availability of materials, finance and time constraints to combine research work and academic work were major challenges the researcher encountered during this research.


1.8 Definition Of Terms

Private Enterprises:

This is a business or industry that is managed by independent companies or private individuals rather than being controlled by the state.

Cash Flow Management:

Cash flow management is the process of tracking how much money is coming into and out of your business. This helps you predict how much money will be available to your business in the future.

Operations:

This is a performance of a practical work or of something involving the practical application of principles or processes.


An Assessment Of Cash Flow Management In Private Enterprises Operations In Nigeria


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An Assessment Of Cash Flow Management In Private Enterprises Operations In Nigeria

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