The Nexus between the Budgetary Process and Financial Performance: Evidence from SMEs in Douala

Abstract

This study investigates the effect of budgetary practices on the financial performance of small and medium-sized enterprises (SMEs) in Douala, employing regression analysis to analyze relationships between budget planning, communication, monitoring & control (M&C), and financial performance. Data were collected from a purposive sample of 150 SMEs, including managers, accountants, and finance personnel, ensuring representation across various sectors and sizes in Douala. Findings indicate significant positive associations between budget communication (β = 0.235, p = 0.013) and M&C (β = 0.236, p = 0.018) with financial performance, highlighting their critical roles in enhancing organizational efficiency and resource management. Budget planning also shows a positive effect (β = 0.172, p = 0.014), emphasizing its strategic importance in initial financial strategy formulation. The study contributes uniquely by empirically validating these relationships within the specific context of Douala's SMEs, offering insights into optimizing budget management practices. In conclusion, this research underscores the importance of strategic budget management practices in driving financial performance, providing a practical framework for SMEs to navigate market complexities and achieve sustainable growth. This contribution is significant in understanding how budgetary practices can drive organizational efficiency and support growth within Douala's dynamic business environment. Recommendations include enhancing budget communication channels through structured meetings and digital platforms, implementing robust monitoring and control systems for real-time financial oversight, and integrating budget planning with strategic decision-making processes to sustain competitive advantage and foster growth in Douala's dynamic business environment.