The Impact of Budgetary Management Process on Organizational Performance: Special Reference to Small and Medium Enterprises in Hambantota District, Sri Lanka

The budgetary management process has been a part of management control system of the organizations. This process encourages Owners, Managers and Accountants to plan the stakeholders involved provides information for improved organizational performance. The purpose of this research was to examine the impact of budgetary management process on organizational performance in the Small and Medium Enterprises (SMEs) in Hambantota district. The researcher has collected data by using a structured questionnaire. Owners, Managers and Accountants have been selected as respondents to collect primary data for the research. The study was considered with four hypotheses which were constructed to reveal whether the independent variables of budgetary coordination, budgetary monitoring, budgetary communication and budgetary evaluation are significantly influence on the dependent variable of organizational performance of SMEs in Hambantota district. The regression results revealed that the budgetary coordination and budgetary monitoring have the highest impact level on organizational performance while the budgetary communication has the least impact level. Further regression results showed that budgetary evaluation has insignificant effect on organizational performance, while this confirms budgetary coordination, budgetary monitoring and budgetary communication have positive and significant impact on organizational performance.


INTRODUCTION
Budgetary management practices are an integral part in making decisions in handling the financial resources in an organization. The effective budgetary management system will reduce the difficulties arising in handling sales, production, direct materials, direct labour, manufacturing overheads, selling and administration costs in monetary terms. Thus, improving budgetary management of an organization enhances the financial, managerial and business performance.
The goal of budgetary management is utilizing the resources in an efficient and effective manner to achieve the predetermined goals and objectives in an organization. Small and Medium Enterprises (SMEs) are gaining wide acceptance as viable drivers of economic growth. According to Karunananda and Jayamaha (2011) when promoting growth and social development of Sri Lanka, SMEs can be identified as an important sector and SMEs are the major component of the economy in a country. According to Dasanayaka (2009) SMEs of the formal sector generate high income through high productivity and creates a suitable life for workers and owners. Today the Sri Lankan government is facing a critical issue of providing employment opportunities for General Certificate of Education Advance Levelpromi and above. The development and growth of SMEs in Sri Lanka provides a solution to this problem because the rate of educated unemployment remains proportionally higher than the rate for less-educated workers in Sri Lanka. Abeygunasekara and Fonseka (2012) mentioned that SMEs are necessary engines for achieving national development goals such as economic growth, poverty alleviation, democratization, economicparticipation, employment creation, strengthening the industrial base and local production structure. Wickramasinghe (2011) stated that SMEs are considered as an engine of growth and an essential part of a healthy economy. Further researcher discovered that although SMEs role in the economy is important, their failure rate is considerably high due to a number of reasons. The reasons for failures include poor management skills of the owner and managers, poor accounting records, lack of access to credit and information technology, low level of technology and absence of technology. According to Bandara (2016) due to lack of proper budgetary control, inappropriate financial and human capital management, lack of up-to-date reliable accounting data and inadequate commitment of owners for business management, 45% of SMEs are failed. Due to the development and expanding of the business number of transactions increased and it is difficult to run the business without a proper budgetary management system. Therefore, keeping a proper budgetary management system is essential for SMEs. Today there is a developing world and with the development of technology, intensive competition, global market and e-commerce, the operating environment has been developed.
Kimani (2014) mentioned that budgeting includes the formation of predetermined goals, reporting results of actual performance and evaluation of performance.
According to Siyanbola and Tunji (2013) with the introduction of proper budgetary system has many advantages such as improving profit and financial position through the improvement of planning and controlling, finding most profitable course of action by directing organization through meeting its primary objectives, managing organization for its survival, preparing effective plans to solve operating and financial problems, translating objectives into actions, coordinating the different factors of production for satisfying all stakeholders and communicating the organizational objectives across the firm can be identified.
Budget is a detailed plan that expressed in quantitative terms, that specifies how resources will be acquired and used during a specified period of time and budget is prepared for the primary purposes of planning, facilitating communication, coordination, allocating resources, control profits and operations, evaluating performance and providing incentives. Most organizations used the budget as a tool of corporate internal control, it helps to prepare future plans and allocate the comprehensive resources efficiently and effectively. According to John and Ngoasong (2008) Siyanbola and Tunji (2013) found that due to the poor knowledge of executives and employees and as a result of technical problems in forecasting future, implementing a budgetary process in organization is challengeable. Silva and Jayamaha (2012) conducted research regarding the budgetary process and organizational performance, but it was limited to the apparel industry. Fonseka and Perera (2014)

Problem Statement
The main purpose of SME is earning a profit for its owners by depending on day-to-day transactions. Even though most of SMEs are earned a profit, they fail to manage their profit in a proper way. Many business organizations in the world do not give budgetary management the prominence it deserves in spite of its varied importance. The problem of budgetary management has existed for too long. This problem is still continuing. Evidence has found that although SMEs role in the economy is important, their failure rate is considerably high due to a number of reasons. But due to the development and expansion of business number of transactions are increased and it is difficult to run the business without a proper budgetary system. Therefore, keeping a proper budgetary system is essential to SMEs.  (Wijewardana, 2018). Though some of these researches discussed on management practices up to some level among these researches there is no any study have been done on the impact of budgetary management process on organizational performance of SMEs in Sri Lanka. Chircir and Simiyu (2017) found that there is a significant positive relationship of budgetary monitoring and budgetary evaluation on financial performance through the study on the influence of the budgetary control system on the financial performance of Almasi beverage group limited, Kenya. But those researches are not covered all the functions of the budgetary process. When considering the above researches which were examined in the Sri Lankan context although there are a number of researches in the SMEs sector, they are not related to the impact of budgetary process on financial performance and even though there are few kinds of researches related to budgetary management process on financial performance they are not in the SMEs sector and all the functions of the budgetary process are not covered.
Researchers have not given attention to the problem of lack of proper budgetary management system in SMEs. Hence this study intends to fill those gaps. This is also one of the issues based on this. There are a number of researches on the impact of the budgetary process on firm performance, but they are not related to the SME sector. Based on the factors discussed above, the researcher identified an empirical research gap. Though there is a number of studies related to the impact of the budgetary process on organizational performance the level of their impact and the relationship between the functions of the budgetary process and organizational performance is not much clear. Hence the researcher intends to fill this gap by identifying the budgetary management process on organizational performance of SMEs in Hambantota district. Further researcher intends to examine the impact of budgetary management process on organizational performance of SMEs.
When considering the above circumstances, it is clear that there is a problem to identify the impact of budgetary management process on organizational performance of SMEs in Hambantota District of Southern Province. Therefore, the researcher identifies the research problem as "Identifying the budgetary management process on organizational performance of SMEs in Hambantota District".
The international context although there is a number of researches related to the impact of budgetary management processes on organizational performance, but they are not related to the SME sector. Therefore the researcher intends to carry out research to fill this research gap by identifying the budgetary management process on organizational performance in SMEs in the Hambantota District.

Objectives
Main objective of the study is to identify the impact of budgetary management process on organizational performance of SMEs in Hambantota District.
To achieve the main objective, the following sub objectives are considered. priorities and allocations to increase growth and savings in budgeting. This is based on through review of services that the budget is intended. This involves the review of the objectives of the services; several thresholds at which the service can operate and the standards that the service is to attain.
Priority Based Budgeting theory suggests that SMEs, just like other organization should prioritize when budgeting to ensure effective budgeting and also let their budgeting process to be guided by proper funding, accountability and transparency at all organizational levels. This theory is relevant to this study for trying to explain how prioritization affects budgeting.

Previous Work
The  (2016) conducted research on budgeting and its impact on financial performance related to the case of non-bank financial institutions in Ghana. The researchers used both primary and secondary methods to collect data and as analyzing tool regression model was used. Seven non-bank institutions selected as the sample. Findings revealed that evaluation has a significant effect on financial performance. Chircir and SImiyu (2017)

Contribution of the study
Mainly the significance of the research on the impact of budgetary management process on organizational performance can be divided into three areas as theoretical, empirical and managerial significance. The heart of the budgetary management system is budgeting. Always efficient budgetary process will guide for the financial performance improvement and development of overall organizational performance occurs due to the efficient budgetary practices. This study will provide a body of knowledge on the impact of budgetary management process on organizational of SMEs in Hambantota district. Recognizing the importance of SMEs in the Southern province is also one of the significances of this study and the findings of this study will serve as important indicators to face future challenges by adopting a budgetary management process with better forecasts.
Not only for small and medium enterprises but also for the other industries may be benefitted with these research findings. This research includes existing literature and knowledge provided to a better understanding of the budgetary management process on organizational performance. The research findings will provide many advantages for many parties. This study support to management in the decision-making process and finance controlling process. The study provides knowledge for allocating scarce resources effectively and cost reduction of production in the business sector. Research offers sufficient knowledge for the academic sector and society regarding the impact of budgetary management process on organizational performance in SMEs. This study provides guidance to the policymakers to develop policies, procedures, and programs for increasing customers' satisfaction and employees' satisfaction when preparing the budget. The entire nation is finally benefitted by these research findings.
Findings and recommendations may be useful to expand small and medium enterprises.
Ultimately, the knowledge further contributes as a useful source for future researchers regarding subject matter.

METHODS
The study was conducted to analyze the impact of the

Sample of the Study
The researcher used a simple random sampling method to select the sample. Considering the limited time and resources of the research requirements, this study was selected 80 SMEs as sample to collect data, but only 60 SMEs were responded.
Since the inabilities to approach to the population which spreads around 100% SMEs that registered in Hambantota District chamber of Commerce.

Method of Data Collection
Primary research is expected to collect data by using questionnaires which are physically distributed to owners, managers and accountants of the selected sample. The questionnaire was designed mainly in a structured way to determine the impact of budgetary management process on organizational performance of SMEs and it developed both in English and Sinhala languages. It is simple worded questionnaire and consisted of two sections as part A and part B. Part A included general information of respondents such as gender, job position and educational level. Also, it consisted with company details such as the number of employees, nature of the business, the budget covering and reviewing period of the business. The questions that used to measure the independent variables and dependent variable are included in the part B. Here researchers prepared these questions according to 5 points Likert scale order.

Regression Analysis
The linear regression model was developed by the researcher for the analyses of the study as given below;   Table   3 RESULTS Table 2 represents the summary of the reliability tests.

Hypotheses Testing
According to the results of regression analysis following discussion is made related to the hypothesis which has been established in the study.
H 1 : There is a significant impact of budgetary management process on organizational performance.
According to the regression analysis results, budgetary management process has a positive impact on organizational performance (β = 1.312) and there is a significant impact of budgetary management process on organizational performance.
Because p value is 0.000 and it is less than 0.05. As a result, H 1 is accepted.
H 1a : There is a significant impact of budgetary coordination on organizational performance.
According the regression analysis results, budgetary coordination has a positive impact on organizational performance (β = 0.534) and there is a significant impact of budgetary coordination on organizational performance. Because p value is 0.000 and it is less than 0.05. As a result, H 1a is accepted.
H 1b : There is a significant impact of budgetary monitoring on organizational performance.
According to the regression analysis results, budgetary monitoring has a positive impact on organizational performance (β = 0.413) and there is a significant impact of budgetary monitoring on organizational performance. Because p value is 0.000 and it is less than 0.05. As a result, H 1b is accepted. According to the regression analysis results, budgetary evaluation has a negative impact on organizational performance (β = -0.010) and there is insignificant impact of budgetary evaluation on organizational performance. Because p value is 0.946 and it is higher than 0.05. As a result, H 1d is rejected. The study examined the impact of budgetary management process on organizational performance in SMEs. According to Kimungui, Memba & Njeru (2015) the results further indicate a Beta coefficient of 0. 419 and a p value of 0.000. Since p value is less than 0.05, the study rejected the null hypothesis and failed to reject the alternate hypothesis. This implies that budgetary process is significant in explaining financial performance of NGOs in health sector in Kenya. It concludes that budgetary process has a positive influence on financial performance of NGOs in Kenya. According to Silva and Jayamaha (2012), based on R square, 77.4% means the budgetary process strongly effect to the organizational performance in Sri Lankan apparel industry. performance. Because most of the respondents in SMEs of Hambantota district give little effort to prepare evaluation reports. Even though taking corrective actions and upgrading areas is important for an organization and budgetary evaluation helps in advance for that, majority staff of SMEs has no understanding regarding that and it badly affects to maintain a proper budgetary evaluation process. Therefore, that result was not accordance with findings of previous researchers such as Chircir andSimiyu (2017), Kimani (2014). According to Silva and Jayamaha (2012) there was a significant impact of budgetary evaluation on organizational performance in apparel industry. But budgetary evaluation did not much influence the organizational performance in apparel industry. Agbenyo et al. (2018), found the positive significant impact of budgetary evaluation on financial performance, therefore it had p -value (0.0004) which is less than 0.05. According to Abongo (2017), budget evaluation had a positive and statistically significant effect on financial performance as evidenced by high t-values (t = 2.942) and high p-values (p = 0.004) of less than 0.005.

CONCLUSION
The objective of this study is to identify the impact of budgetary management process on organizational performance in SMEs in Hambantota district. It is an explanatory research that was conducted by using primary data. When applying budgetary management process for an organization, researcher suggests to pay more attention on budgetary evaluation. Because to face challenges successfully, entire budgetary process should be in good manner. Here the findings indicate that there are poor budgetary evaluating procedures in SMEs in Hambantota district due to lack of knowledge regarding evaluation reports and evaluation process etc. Therefore, following suggestions can be taken to improve the budgetary evaluation process. Mostly SMEs have owners, but in medium sized SMEs, employees more than 50 should set up a budget committee to manage the potential disagreements of managers and they must review the costs of activities. Due to the dynamic environment, there should be necessary adjustments from time to time. Additional training and motivation are needed. Training must be aimed to help them understanding the importance on how to conduct more efficient control in evaluation. From the findings, it is evident that some respondents had school level qualification. Therefore, it is important to start training and educating more young staff for the near future. The evaluation reports must be prepared frequently and must take corrective actions where necessary and upgrade budgeting process of next years. Also doing a regular audit is important in evaluation process. These procedures help for the organizations to face future challenges.
Descriptive results show budgetary coordination has the highest impact level on financial performance. Hence researcher recommends for the SMEs to create policies, rules and regulations in appointing responsible staff with good coordinating skills. Further there are limited resources such as financial resources, human resources and information resources in the businesses. These research findings indicate that management should pay much attention towards budgetary coordination when allocating resources in their decision-making process.
Further this study provides sufficient knowledge to academics by explaining the impact of budgetary management process on organizational performance in SMEs in Hambantota district. By paying much attention to these recommendations SMEs can enhance their financial performance with the development of the well-organized budgetary management process.