Thesis:

Working capital management practices and financial Performance of deposit-taking saccos in North rift region, Kenya

Savings and Credit Co-operative Societies (SACCOs) play a key role in promoting financial inclusion and economic growth. However, many SACCOs in Kenya’s North Rift region have seen a steady decline in their financial performance, particularly in Return on Assets (ROA), over the past five years. This raised concerns about how effectively these institutions manage their working capital. Despite this challenge, little has been done to explore how day-to-day financial decisions—especially around receivables, payables, and cash balances—impact SACCO performance. The purpose of the research was to determine the effect of working capital management practices on the financial performance of deposit-taking SACCOs in North Rift Counties, Kenya. The specific objectives were: to determine the effect of accounts receivable management on the financial performance of SACCOs in North Rift Counties, Kenya; to determine the effect of accounts payable management on the financial performance of deposit-taking SACCOs in North Rift Counties, Kenya and to establish the effect of cash management on the financial performance of deposit-taking SACCOs in North Rift Counties, Kenya. The study was guided by the cash conversion cycle theory, the trade-off, and the agency theory. An explanatory research design was be used, targeting 27 deposit-taking SACCOs in North Rift Counties. This study relied on secondary data spanning five years (2020–2024), providing a longitudinal view of the target population. Data was obtained from Sacco Societies Regulatory Authority (SASRA) reports and individual SACCO reports, then verified, sorted, and edited before analysis. Statistical Package for the Social Sciences (SPSS) 27 was used for data examination, and findings were presented in tables and figures. Diagnostic tests included normality, multicollinearity, heteroskedasticity, and the Hausman test. Findings revealed that accounts receivable management had a statistically significant negative effect on financial performance, indicating that quicker collection of receivables improved ROA. Accounts payable management had a positive but statistically not significant effect, while cash management showed a strong, statistically significant positive effect, emphasizing the role of liquidity in performance. The research concludes that efficient management of receivables and cash positively impacted SACCO performance, whereas payables management had minimal influence. Based on these findings, the study recommends that SACCOs strengthen their receivables collection processes, improve cash flow planning, and find a balanced approach to managing their payables. Future studies could explore other SACCO types or consider how governance and economic conditions affect financial performance.