Exploring Working Capital Practices in Albanian SMEs: A Descriptive Analysis of Financial Decision-Making

Abstract

This paper presents a descriptive study that examines financial management practices in small and medium-sized enterprises (SMEs) in Albania, with a specific focus on working capital components. The analysis is based on a structured questionnaire completed by firm representatives, covering decision-making, owner qualifications, use of software, cash planning, inventory control, and trade credit policies. While many firms report using digital tools and preparing cash budgets, overall financial practices remain largely intuitive and informal. A significant share of decisions is made by owners with limited financial or accounting education, and key elements such as cash surpluses, shortages, inventory levels, and credit sales are handled without structured policies. These conditions may contribute to inconsistencies in managing short-term financial resources, potentially creating anomalies that threaten the firm’s financial stability. The study does not address other areas of financial decision-making but aims to shed light on common working capital practices and highlight the need for stronger financial awareness and planning capacity within SMEs and among their leadership.