Influence of Cash Management on Financial Performance of Selected Savings and Credit Cooperative Societies in Meru County, Kenya

Abstract

Saccos were intended to provide a variety of financial services tailored to market demands for their clients. To successfully offer these services, they needed a well-managed and robust current asset’s structure, maintained by qualified personnel. Effective asset management would enable Saccos to meet their obligations promptly. However, Kenyan Saccos have faced issues with low liquidity ratios, struggling to maintain the required 15% monthly legal cash flow ratios, often relying on expensive bank loans for support. The main aim of the study was to investigate how cash management influences the financial performance of savings and credit cooperative societies in Meru County, Kenya. The study applied pecking order theory to cash and short-term securities management. The study selected representatives from the entire population using a simple random sampling method to have 13 customer care officers, 34 tellers, 28 back-office staff, and 36 loans officers, totaling 111 respondents. A descriptive research design was chosen to gather data from 24 deposit and non-deposit Saccos in Meru County. Both quantitative and qualitative data were collected using closed-ended questionnaires and financial statements. Descriptive statistics such as frequency, percentage, and mean were calculated. The findings were essential for Sacco management, providing insights into how the management of cash asset be optimized to enhance the liquidity of the institutions.