Abstract:
Small and Medium Enterprises (SMEs) form the backbone of Sri Lanka’s economy,
driving employment, income generation and regional development. However, many
SMEs particularly those in rural districts such as Anuradhapura, face significant
financial challenges due to weak financial management, poor record-keeping, limited
use of accounting systems and difficulties in making sound investment decisions.
These factors restrict profitability, hinder efficient resource use and threaten long term sustainability. This study investigates the impact of financial management
practices on SME performance in the Anuradhapura District. It focuses on four areas:
working capital management, financial reporting and analysis, accounting
information systems and investment appraisal. Using a quantitative research
approach, data were collected through structured questionnaires from 150 SME
owners and managers. Statistical tools, including correlation and regression analysis
were employed to examine how these practices influence business performance
indicators such as profitability, sales growth and stability. The findings are expected
to provide clear evidence on which financial management practices most strongly
affect SME success in resource-constrained areas. By understanding these impacts,
SME owners can adopt more effective strategies to improve operations, while
policymakers and financial institutions can design targeted training programs,
incentives and support systems to strengthen SMEs in rural regions. Ultimately, this
research aims to promote better financial discipline and decision-making, enabling
SMEs in Anuradhapura to become more competitive, resilient and capable of
contributing to sustainable economic development.
