PENDING BILLS PRACTICES AND FINANCIAL PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN KISII COUNTY, KENYA
Abstract
This study investigated the relationship between pending bills practices and financial performance of SME’s in Kisii County, focusing on key variables such as payment terms, payment methods, billing cycles, and account status. The research is anchored in Agency Theory, which examines the principal-agent relationship between the county government and SMEs, and the Resource-Based View (RBV), which highlights financial resources as critical assets for business sustainability. The study adopted a mixed-methods approach, integrating quantitative surveys and qualitative interviews to provide a comprehensive analysis of the issue. The target population consists of SMEs that have provided goods and services to the county government. A purposive sampling technique is used to select 50 SMEs and 10 key informants, including county officials and financial experts. Structured questionnaires are used to collect quantitative data on financial performance indicators such as cash flow, liquidity, and profitability, while in-depth interviews explore the underlying causes and implications of delayed payments. Data analysis is conducted using regression analysis to determine correlations between payment delays and financial performance, while qualitative data is subjected to thematic analysis to identify recurring patterns and insights. Preliminary findings indicate that inefficient payment processes, bureaucratic bottlenecks, and inconsistent billing cycles significantly disrupt SME cash flow, reduce liquidity, and undermine profitability. The study further highlights the role of government financial policies, budgeting constraints, and technological inefficiencies in exacerbating payment delays. Based on the findings, the study recommends the adoption of digital payment solutions, streamlined billing cycles, and enhanced financial governance to mitigate the adverse effects of payment delays. Implementing structured payment frameworks, e-invoicing systems, and policy interventions can improve the efficiency of SME payments and enhance business sustainability. The study contributes to the existing literature on public procurement and SME financial management by offering practical insights into policy reforms and best practices that can support SME growth in county government procurement.
Key Words: Payment Planning, Bill Categorization, Budget Rationalization, Payment Due diligence
CITATION: Mose, K. M., & Miroga, J. (2025). Pending bills practices and financial performance of small and medium enterprises in Kisii County, Kenya. The Strategic Journal of Business & Change Management, 12 (2), 999 – 1017. http://dx.doi.org/10.61426/sjbcm.v12i2.3254
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DOI: http://dx.doi.org/10.61426/sjbcm.v12i2.3254
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