Examining the impact of digital accounting systems on the business continuity of SMES; a case study of Kampala district SMES.

Abstract

This study examined the effect of digital accounting systems on business continuity among Small and Medium Enterprises (SMEs) in Kampala District, Uganda. The study was guided by three objectives: to examine the current practices adopted by SMEs in Kampala to enhance business continuity, to assess the level of adoption and utilization of digital accounting systems among SMEs, and to establish the effect of digital accounting systems on business continuity. A descriptive research design was adopted, employing a quantitative approach. Data were collected using structured questionnaires administered to SME owners, managers, accountants, finance officers, and bookkeepers. The study targeted SMEs operating within Kampala District, and data were analyzed using both descriptive and inferential statistical techniques. The findings revealed that SMEs had adopted several business continuity practices. Employee training on handling operational disruptions was the most highly rated practice (Mean = 4.35), followed by maintaining strong relationships with customers and suppliers (Mean = 4.29), regular backup of business and financial data (Mean = 4.28), adoption of digital technologies (Mean = 4.27), and utilization of electronic payment systems (Mean = 4.27). However, weaknesses were identified in financial record management (Mean = 2.53) and certain aspects of data backup and protection (Mean = 2.35).The findings further established that the adoption and utilization of digital accounting systems among SMEs were generally moderate to high. Employee competence in using digital accounting systems received the highest rating (Mean = 4.92), while budgeting and financial planning (Mean = 4.68), system integration with business operations (Mean = 3.87), management support (Mean = 3.72), and transaction recording (Mean = 3.52) were also positively rated. Nevertheless, the study revealed low utilization in cash flow monitoring (Mean = 2.67), accessibility of financial information (Mean = 2.33), and full integration of digital accounting systems into daily accounting activities (Mean = 2.20). The study also established that digital accounting systems positively influenced business continuity among SMEs. Respondents agreed that digital accounting systems improved continuity of operations (Mean = 4.27), enhanced the accuracy and reliability of financial information (Mean = 3.87), supported service delivery during disruptions (Mean = 3.43), facilitated timely decision-making (Mean = 3.23), and improved financial management and control (Mean = 3.19). However, the systems were perceived as less effective in supporting business recovery after disruptions (Mean = 2.46), enhancing organizational resilience (Mean = 2.36), and reducing the risk of losing financial records (Mean = 2.12).