Commonly used inventory-management methods was speculation and generally owners relied on

experience and intuition to make most decisions, as many of them lacked formal education. Using
speculation, firms would purchase inventory beforehand and before demand was known with certainty.
In a study conducted by Yiadom and Agyei (2011) most of the small firms in Ghana uses manual
notebook as a means of keeping records of transactions and only few of the said entities uses computers
in tracking their inventory. About 61% of their respondents mentioned pilferage as their major problem
and the remaining 39% said that the low level of inventory was caused by unaccounted-for drawing of
family members. In another study, Ladzini (2006) found that key among the major causes of the failure
of small businesses was a lack of use of effective inventory-management practices which had increased
their inventory-carrying costs, such as storage costs, insurance premiums and the opportunity cost of
capital tied up in the inventory.

Smaller firms had fewer human resources and were highly dependent on the principal owners' time and
skills. This therefore required individuals working in the firms to be multi-skilled. In some cases,
knowledge of inventory-management practices was available, but because of the many tasks that were
left to one individual, the practices were not efficiently carried out effectively (Cressy, 1996). Thus, more
focus on better inventory management practices on improve the efficiency of the firms thereby leading
to better profitability. This is vital for small scale firms as they are struggling nto compete with large
firms in today's market of global competition (Krishnan and Pavithran, 2018).

FACTORS AFFECTING WCM

The term Working Capital is almost known to all financial experts; however, its operation is very difficult
and greatly misunderstood (Afrifa, 2013). The difficulties in adequately managing working capital mean
that several factors such as age, gender, education and experience may change the firms performance.

A research into the effect of education and work experience on WCM practices of small fiems is very
crucial given that they are the backbone of almost all countries around the world (Lucas, 2005; Abor and
Quartey, 2010). Recently, Nyamao et al (2012) conducted a study to elucidate the WCM practices of
small firms in Kenya using sample of 113. They conducted that WCM practices are low amongst the said
entities as majority had not adopted formal WCM routines. Agyei-Mensah (2010) also conducted a
research into the WCM practices in the Ashanti region of Ghana. Using a sample of 800 randomly
selected firms the study revealed weak WCM skills within the sector. Prior related experience is believe
the confer valuable knowledge and skills that can be applied to any particular work context. Adequate
work experience will help reduce the number of errors and mistakes, which will lead to enhanced firm
performance. Experience has been cited as an important factor affecting many aspects of small firms
(Chiliya and Roberts and Lombard, 2012). The educational level and work experience of small entities
are very important to the effective and efficient Working Capital Management ( Agyei-Mensah 2010).
Highly qualified and experienced individuals may be able to manage all aspects of WCM as compared to
unqualified and inexperienced ones. For example, such individual may be able to negotiate good credit
terms with suppliers and customers alike. He may also be able to employ latest computerized
accounting packages to control the levels of inventory in order to maximize firm performance (Agyei-
Mensah 2010). According to Atrill (2006), small firms often lack the resources to manage their account
receivables effectively. Agyei-Mensah (2010) argues that both expertise and the information required to
make sound judgments concerninf terms of sales and so on, may not be available in small entities.