Today’s asset management was found to be one of the main ingredients for the growth and livelihood of small businesses in Ghana. An effective working capital policy was found to influence a small business’ expected future returns and associated risks. The purpose of current asset management is to have an effective working capital policy. An effective working capital policy must exhibit the following characteristics in its code: Effective stock and credit policies, control over working capital, maintenance of current assets that can be easily converted into cash, efficient management of working capital, level of liquidity risk that management is prepared for. accept, the industry in which the company operates, the type of products sold and how to finance the working capital? The ability to manage and control current assets (cash, inventory (finished goods and work in progress), accounts receivable (debtors) was very important.

Stock or inventory is the least liquid of current assets. If stocks are managed effectively, they can be converted to cash very easily. Stocks were being wasted due to the fact that most companies could not or did not know how to manage their stock even applying the traditional “FIFO-LIFO” method, and they were paying huge sums of money because they had too much stock; some of them become obsolete with the consequence of loss of cash.

It must also be said that debt collection is a very difficult task to undertake in Ghana due to any of the following factors:

I. The fact that the address system was not developed to include citizens in a database to facilitate debt collection,
ii. The practice of “cram and carry” in which merchants with little or no capital decide to “convert” the funds from the trade credits to other companies and sometimes the end result is to lose all the money to the detriment of the creditor, which that makes the company go bankrupt.

By offering commercial credit, companies expose themselves to the risk of default, thereby tying up financial resources, leading to a final loss of cash and consequently cash flow. SMEs in Ghana often use commercial credit policy as a tactic in their strategies to attract customers. Reasons for offering business credit include increasing sales and marketing. A whopping 85% of all analyzed data (including people) showed that respondents practiced and continue to practice financial management.

Also in many cases, due to the absence of inventory control policies, cash was blocked and affected the cash flow of the company. The basic needs to run the business day by day suffered; for example, in some cases, staff salaries became difficult to pay with associated problems.

Effective regular banking practice is another financial capability identified through the observational case study. For example, a company was operating an overdraft facility and managed to negotiate with the bank in question by ensuring that the bank had someone on site to collect daily cash sales. This improved cash flow and helped reduce the interest paid to the bank. In the event that a business cannot do the same, cash sales must be paid first thing the next day.

Through the case study it was discovered that a relevant source of financing plays an important role in the financial capacities of small and medium-sized enterprises in Ghana. The ability of a company to identify the relevant or correct source of financing that it needs, such as the ease of overdraft, short, medium or long-term loans in terms of its circumstances or type of business operations, is in a very good position to increase your profits, pay less interest to the bank, and you can expect to sustain growth and therefore the business in the future. The investigation found that those companies that meet their obligations to banks were always able to raise money from the bank to expand their business or face unexpected problems.

It was also found that effective control and monitoring of financial plans is a financial capability. It is one thing to manage finances and another to monitor and control finances. For finances to be managed effectively, there must be regular controls (restrictions as some have described) and monitoring (checking or closely observing) the financial plans by which finances (and accounting) are managed in the company. In some cases, changes and deviations could be made to simplify plans. For example, if it turns out in monitoring and control that the market reaction will affect the order of more goods, this could be delayed or stopped altogether to save cash for the business that can save the company in the long run.

So by completing your underlying strategy and insight, owner-managed businesses can be a force to be reckoned with in the business environment.