AFRAG009

Leveraging Working Capital Management Techniques in Response to the COVID-19 Crisis: Evidence from Nigeria

Anisiuba, Chika Anastesia (Ph.D) chika.anisiuba@unn.edu.ng

Department of Accountancy, University of Nigeria, Enugu Campus

Ezeaku, Hillary Chijindu (Ph.D) gijindu@gmail.com

Department of Banking and Finance, Caritas University, Enugu

Abstract

Manufacturing SMEs procure materials/goods from their suppliers, store them during pre and postproduction process before selling them to customers. This cycle ties down a high percentage of a company’s available financial resources, thereby increasing holding cost of inventories. Usually, a company only gets back the liquidity when the manufactured goods have been paid for which can be delayed. The aim of this study is to ascertain the working capital management techniques that are applied by small and

medium scale enterprises (SMEs) in Nigeria in the process of economic recovery from global economic recession occasioned by COVID-19 pandemic, and to explore all the possible alternative policy options for effective management of working capital. The study utilizes qualitative survey research design. Questionnaire were administered to manufacturing SMEs managers and employees in South-east, Nigeria using systematic random sampling technique. This was complemented by detailed interview of the company managers and employees. The study indicates that most of the manufacturing SMEs speed up collection processes of their receivables, reduced payment period for the debtors, seek for longer payment period for the creditors, maximize sales and maintain only necessary expenses which helps them to sustain their business in the face of economic crisis. This implies that working capital management is an efficient and effective means for the achievement of business recovery. The researchers recommend that manufacturing SMEs should ensure continuous application and learning of working capital management techniques for strategic and sustainable management of the organization.

Keywords: Leveraging, working capital management techniques, COVID-19 crisis, SMEs, Nigeria