PAYABLES MANAGEMENT: AN INFLUENCING FACTOR TO FINANCIAL SUSTAINABILITY OF AGRICULTURAL COMPANIES LISTED AT THE NSE IN KENYA
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Abstract
Kenya’s economy is reliant on agricultural sector; but reports show declining performance, with some firms in debt, under receivership or collapsing. Cognizant of the importance of the sector, the national government has bailed out sugar mills severally. Thus, the paper seeks to assess the effect payables management on financial sustainability of the listed agricultural companies in Kenya. The theoretical foundation was based on cash conversion cycle theory, and resource theory of sustainable finance. Through an explanatory causal research design. The study targeted the six listed agricultural companies, from which secondary data was collected from its published financial reports. The data analyzed using descriptive and inferential statistics revealed payables management at (β=0.610, t=2.133>1.96, p=0.000<0.05) had positive and significant effect to financial sustainability of the listed agricultural companies. This paper concludes that payables management is a significant predictor of financial sustainability of a firm. The study recommended that finance managers working with agricultural companies listed at the NSE in Kenya should consciously delay payment of accounts payable and optimize short-term working capital without straining and hurting relationship without creditors. There is need for these firms to leverage on latest technologies especially artificial intelligence to track and monitor movement of inventory items, reduce holding costs and improve operating efficiency.
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References
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Wang, B. (2019). The cash conversion cycle spread. Journal of financial economics, 133(2), 472-497.
Yordanova–Dinova, P. (2019). Key indicators for the analysis of financial sustainability of the enterprise. Knowledge-International Journal, 30(1), 125-130.
Zeidan, R., &Shapir, O. M. (2017). Cash conversion cycle and value-enhancing operations: Theory and evidence for a free lunch. Journal of Corporate Finance, 45, 203-219.
Zhou, Y., Zhu, Y., & Wong, W. K. (2023). Statistical tests for homogeneity of variance for clinical trials and recommendations. Contemporary clinical trials communications, 33, 101119
Anorue, H. C., & Ugwoke, E. O. (2022). Management of Account Receivable and Payable for Improved Financial Performance of Small-Scale Industries in Imo State, Nigeria. International Journal of Research and Innovation in Social Science, 6(4), 100-107.
Bitok, S. K., Cheboi, J., & Kemboi, A. (2021). Influence of financial leverage on financial sustainability: a case of microfinance institutions in Kenya. Journal of Finance and Accounting Research, 3(1), 1-17.
Bloomfield, J., & Fisher, M. J. (2019). Quantitative research design. Journal of the Australasian Rehabilitation Nurses Association, 22(2), 27-30.
Burnie, D. A., & Ridder, A. D. (2023). Accounts payable management. In Working capital management: Concepts and strategies (pp. 283-307).
Cunha, F. A. F. D. S., Meira, E., & Orsato, R. J. (2021). Sustainable finance and investment: Review and research agenda. Business Strategy and the Environment, 30(8), 3821-3838.
Gakurya, C. F., &Olouch, J. (2018). Effect of accounts payable management on performance of coastal county government ministries. International Journal of Business Management and Processes (ISSN 2616-3209), 4(2), 12-12.
Gordeeva, T. (2024). Analysis of the Influence of Accounts Payable on The Enterprise’s Financial State. Grail of Science, (38), 41-45.
Ikechukwu, O. I., &Nwakaego, D. A. (2015). The effect of accounts payable ratio on the financial performance of food and beverages manufacturing companies in Nigeria. Journal of Research in Business and Management, 3(9), 15-21.
Johan, S., Kayani, U. N., Naeem, M. A., & Karim, S. (2024). How effective is the cash conversion cycle in improving firm performance? Evidence from BRICS. Emerging Markets Review, 59, 101114.
Kalnins, A., & Praitis Hill, K. (2025). The VIF score. What is it good for? Absolutely nothing. Organizational research methods, 28(1), 58-75.
Kanana, K. D. (2024). Effects of Working Capital Management on Financial Performance of Level Three and Four Public Hospitals in Meru County (Doctoral dissertation, KeMU).
Kieti, W. M., & Aluoch, M. O. (2024). Corporate Board of Directors’ Activities and Profitability of Agricultural Firms Listed on the Nairobi Securities Exchange, Kenya. International Academic Journal of Economics and Finance, 4(2), 59-89.
Kipkemoi, P., Kiru, K., & Koima, J. K. (2018). Effect of inventory and cash conversion cycles on financial performance of listed commercial and service firms in Nairobi securities exchange Kenya. Scholars Journal of Economics, Business and Management (SJEBM), 1(1), 1-10.
Kiptum, I. K. (2023). Accounts Payable Management and Financial Performance in West Pokot County Government, Kenya (Doctoral dissertation, University of Nairobi).
Kithinji, M. M., Wephukulu, J. M., Gekara, M., & Mwanzia, M. (2022). Effect of account payable management on financial performance of public universities in Kenya. Reviewed Journal International of Business Management [ISSN 2663-127X], 3(1), 83-100.
Kwak, S. G., & Park, S. H. (2019). Normality test in clinical research. Journal of Rheumatic Diseases, 26(1), 5-11.
Mittal, S., & Monika. (2020). Accounts receivable: payable impact on each other with special reference to financial performance—a study of small cap companies. SEDME (Small Enterprises Development, Management & Extension Journal), 47(4), 362-373.
Muthoni, J. G., Kiprotich, I., Naibei, N., & Kipyego, M. (2020). Management of accounts receivable and financial performance of manufacturing firms listed in Nairobi Stock Exchange, Kenya. International Journal of Scientific and Research Publications, 10(12), 513-523.
Odo, S. I., & Udodi, J. N. (2022). Influence of cash management on financial performance of selected manufacturing companies in Nigeria. Contemporary Journal of Banking and Finance, 3(6), 26-41.
Onchieku, J. O. (2021). Effect of Working Capital Management on Financial Sustainability of Non-governmental Organizations with Income Generating Activities in Kenya (Doctoral dissertation, University of Nairobi).
Orazalin, N., Mahmood, M., &Narbaev, T. (2019). The impact of sustainability performance indicators on financial stability: evidence from the Russian oil and gas industry. Environmental Science and Pollution Research, 26, 8157-8168.
Ozili, P. K. (2022). Theories of Sustainable Finance. Managing Global Transitions, 21(1), 5-22.
Richards, V. D., & Laughlin, E. J. (1980). A cash conversion cycle approach to liquidity analysis. Financial management, 32-38.
Sandberg, J. (2018). Toward a theory of sustainable finance. Designing a sustainable financial system: Development goals and socio-ecological responsibility, 329-346.
Schoenmaker, D. (2018). A framework for sustainable finance (pp. 1-31). Centre for Economic Policy Research.
Sedevich-Fons, L. (2020). Accounting and quality management: the accounts payable function under ISO 9000. Business Process Management Journal, 26(3), 694-706.
Siedlecki, S. L. (2020). Understanding descriptive research designs and methods. Clinical Nurse Specialist, 34(1), 8-12.
Wang, B. (2019). The cash conversion cycle spread. Journal of financial economics, 133(2), 472-497.
Yordanova–Dinova, P. (2019). Key indicators for the analysis of financial sustainability of the enterprise. Knowledge-International Journal, 30(1), 125-130.
Zeidan, R., &Shapir, O. M. (2017). Cash conversion cycle and value-enhancing operations: Theory and evidence for a free lunch. Journal of Corporate Finance, 45, 203-219.
Zhou, Y., Zhu, Y., & Wong, W. K. (2023). Statistical tests for homogeneity of variance for clinical trials and recommendations. Contemporary clinical trials communications, 33, 101119