Impact of financial management practices on the performance of small enterprises (SEs) : a study based on the perceptions of entrepreneurs in Southern Assam, India

Financial management practices play a crucial role in shaping the performance and growth of enterprises. Financial management involves arranging both short-term and long-term funding needs, ensuring the smooth functioning of enterprises. This research aimed to examine the relationship between financial management practices and the performance of small enterprises, as well as the impact of these practices on enterprise performance. Recognising the importance of financial management in enterprises, this study focused on small enterprises, which was key contributors to the growth of Northeast India. The research investigated entrepreneurs’ perceptions of financial management practices and their relationship to the performance of small enterprises in Northeast India. The study based on primary data collected from a sample of 50 registered small enterprises under the District Industries Centre, Silchar. The data were analysed using descriptive statistics and Spearman’s rank correlation. The results indicate that financial management practices – namely Capital Budgeting, Cash Management, Stock Management, Receivable Management, Capital Structuring, and the Use of Information Technology for maintaining financial records – are significantly correlated with enterprise performance. Furthermore, statistical tests using multiple regression analysis demonstrated that these practices positively and significantly impact the performance of small enterprises. The findings of this study will assist entrepreneurs in identifying the financial management practices that play a crucial role in improving the performance of small enterprise