Co esponding au ho : Rakesh, Mohanlal
Copy igh © 2025 Au ho (s) e ain he copy igh o his a icle. This a icle is published unde he e ms o he C ea i e Commons A ibu ion Liscense 4.0.
E alua ing he impac o equen policy e iews on he liquidi y o non-p o i wel a e
o ganisa ion in Sou h A ica
Rakesh Mohanlal *
Economics and Managemen Sciences, Business Managemen , No h Wes Uni e si y, Sou h A ica.
Wo ld Jou nal o Ad anced Resea ch and Re iews, 2025, 27(02), 1718-1729
Publica ion his o y: Recei ed on 9 July 2025; e ised on 23 Augus 2025; accep ed on 25 Augus 2025
A icle DOI: h ps://doi.o g/10.30574/wja .2025.27.2.3063
Abs ac
Examining he impac o he equency o policy e iews on he liquidi y le els o wel a e non-p o i o ganisa ions
(NPOs) in Sou h A ica. The s udy ollowed a esea ch su ey me hodology and was con ined o wel a e NPOs in all nine
p o inces o Sou h A ica. An elec onic su ey was implemen ed due o he as a ea o co e age. A quan i a i e
app oach was used because o he inancial and policy-based na u e o he esea ch hypo hesis which aimed o es he
heo e ical li e a u e. The s udy e ealed ha majo i y o o ganisa ions ollow a o mal policy e iew app oach which
is managed by he inance commi ee. The esul s show ha 90.4% o he inance commi ees mee annually. Tha ’s also
he ime when mos policy e iews ake place. A he same ime, he inancial s a emen s a e due o app o al, which is
a s a u o y equi emen . The esul s indica ed ha o ganisa ions which ha e mo e equen policy e iews ha e
imp o ed liquidi y le els. I is ecommended ha NPOs need o inc ease he equency o hei policy e iews o
imp o e hei liquidi y le els. The ollowing conclusions emana ed om he da a analysis: mo e emphasis needs o be
placed on adop ing he co ec policy app oach and he equency o policy e iews needs o inc ease and be mo e
adap able o esul in imp o ed liquidi y o NPOs. Limi ing he unning o o ganisa ions only o compliance wi h
s a u o y equi emen s is imp ac ical and does no achie e pe o mance. The c ea ion o sus ainable NPOs whose added
alue can con ibu e o socie y wi hin he coun y is necessa y based on he basic se ices hese o ganisa ions o e .
Keywo ds: Wo king Capi al Managemen Policy; Non-P o i O ganisa ion; Liquidi y; Cu en Asse s; Cu en
Liabili ies
1. In oduc ion
1.1. Backg ound and Con ex
Acco ding o he Depa men o Social De elopmen (DSD), Sou h A ica has o e 95 000 egis e ed wel a e
o ganisa ions (DSD, 2022). These wel a e o ganisa ions p o ide se ices o he des i u e, o phanages, he aged, disabled
indi iduals and abused women and child en. They ake ca e o he mos ulne able in he coun y and o m a b idge
be ween he go e nmen and co po a e sec o s o ensu e socie al upli men . The compliance o hese o ganisa ions is
egula ed by he DSD.
O e he yea s, esea ch o ganisa ions such as T ialogue ha e pe o med su eys o de e mine he heal h o NPOs
wi hin he coun y. Thei s udy in 2021 ci ed ha he cash ese es o o ganisa ions had d opped by 53% be ween May
2021 and June 2021 (T ialogue, 2021). Reduced unding has placed a bu den on he ope a ions o hese o ganisa ions.
Mazanec (2022) s a es ha wo king capi al is a c i ical pilla o inance and, acco ding o Hung and Hage (2019), cash
is he li eblood o an o ganisa ion. A decline, much less a s oppage, in he managemen o his wo king capi al componen
will esul in an o ganisa ion downsizing o ailing and e en ually ha ing o close.
Wo ld Jou nal o Ad anced Resea ch and Re iews, 2025, 27(02), 1718-1729
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1.2. Wo king Capi al and Liquidi y Impe a i es
The in e nal con ol o wo king capi al is egula ed by policies ha manage each componen he eo . This s udy
examined he impac o he equency o policy e iews on he liquidi y o NPOs in Sou h A ica. Liquidi y is an indica ion
o he numbe o inancial esou ces a ailable o an o ganisa ion o co e all i s expenses. One o he indica ions o an
NPO’s inancial pe o mance is i s liquidi y managemen .
This esea ch aimed o unde s and he liquidi y le els o he wel a e NPOs in he nine p o inces/s a a o Sou h A ica
and how policies ha e a ec ed hese liquidi y le els. Policies p o ide s uc u e and enable he con ol o an o ganisa ion
i hey a e managed e ec i ely and ake cognisance o changes wi hin he o ganisa ion.
In he ques ionnai e used o acqui e he esea ch da a, esponden s we e eques ed o p o ide hei o ganisa ion’s
liquidi y s a us o he las inancial yea . They had o answe ques ions abou he equency o policy e iews, he
adap abili y o policy e iews and he o e all pe o mance o he o ganisa ion. Thei esponses p o ided imp o ed
awa eness o he impo ance o wo king capi al managemen and indica ed he co ec i e ac ions ha needed o be
aken. Addi ionally, o he sec o s we e p o ided wi h a lea ning oppo uni y.
This kind o esea ch had no been pe o med on any Sou h A ican NPOs and would he e o e p o ide a iew in o his
sec o and i s inancial managemen p ac ices. The s udy concluded wi h a ecommenda ion on he compa ison o policy
managemen , liquidi y pe o mance, s a u o y egula ion and ac i e managemen and ecommended whe he he s a us
quo equi ed e-alignmen wi h ad ancemen .
1.3. Resea ch Scope and Objec i e
The Resea ch Ques ion been add essed a e:
• Does he equency o policy e iews ha e an impac on liquidi y in non-p o i wel a e o ganisa ion in Sou h
A ica?
• The main hypo hesis o he s udy was as ollows:
• H₁: The equency o policy e iews has an impac on liquidi y le els in wel a e non-p o i o ganisa ions.
• H₀: The equency o policy e iews has no impac on liquidi y le els in wel a e non-p o i o ganisa ions.
Many di e en ac o s cause liquidi y p oblems in o ganisa ions. In e nal inancial managemen is conside ed one o
he mos p ac ical and ele an o all because in e nal inancial managemen is embedded in he day- o-day ope a ions
o an o ganisa ion. Wo king capi al managemen policies a e he e o assis indi iduals and guide hem wi h hei daily
unc ions in inance. Thus, he esea ch ques ion aimed o unde s and whe he he policies ha a e implemen ed wi hin
an o ganisa ion enable o disenable he achie emen o op imum inancial pe o mance. Financial pe o mance has
been linked o liquidi y as his indica o d i es he daily inance mechanisms – cash, accoun s ecei able, in en o y,
accoun s payable and sho - e m liabili ies – o o ganisa ions.
O he ac o s which impac he wo king capi al managemen policy a iable ha we e also analysed we e he policy
decision-make s and hei impac on he decision-making p ocess. The key unde s anding equi ed was he le el o
equency and pa icipa ion by hese decision-make s in he p ocess. This was hen u he examined by he ype o
policies o ganisa ions ollowed and how hey we e managed wi hin his sec o . All hese ac o s we e conside ed in
e ms o he s a u o y and legisla i e equi emen s o he unning o NPOs in Sou h A ica.
Despi e he NPO sec o being one o he la ges sec o s in he economy o Sou h A ica, ew and agmen ed s udies on
NPOs in he coun y exis . The ocus o NPOs is o en no on in e nal inancial sus ainabili y and managemen con ol.
Liquidi y is one o he key d i e s o an o ganisa ion’s ading. Once he liquidi y le el d ops, he cash low o he
o ganisa ion becomes deple ed and he se ices o goods supplied dec ease and he o ganisa ion slowly becomes
unsus ainable and, wi hou i s ‘li eblood’ (Hung & Hage , 2019), closes. Cu en ly, no esea ch on wo king capi al
managemen pe o mance and liquidi y le els in a c oss-sec ional s udy o wel a e o ganisa ions in Sou h A ica has
been published.
The s udy aimed o unde s and whe he he liquidi y p oblem was associa ed wi h he way policies a e managemen .
Al hough no single s udy add esses his aspec , Yao and Deng (2018), ind ha policies can be enable s o disable s o
o ganisa ional pe o mance. In he co po a e sec o , a a ie y o s udies on di e en indus ies ha e been unde aken
o unde s and sol ency/liquidi y, policy managemen and p o i abili y on he pe o mance o companies o indus ies.
Wo ld Jou nal o Ad anced Resea ch and Re iews, 2025, 27(02), 1718-1729
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2. Theo e ical F amewo k and Li e a u e Re iew
2.1. Wo king Capi al F amewo k
Wo king capi al is made up o cu en asse s – in en o y, cash and accoun s ecei able – and cu en liabili ies –
accoun s payable, sho - e m liabili ies and ma ke secu i ies (Gi man & Zu e , 2012). The di e ence be ween he asse
class and he liabili y class de e mines he liquidi y o an o ganisa ion. The highe he asse s a e o he liabili ies, he
mo e cash he o ganisa ion is gene a ing and is he e o e highly liquid as i can co e i s expenses and has a high ma gin
o eco e y (i.e. i has a a io ou come o g ea e han 1) (S i idhya e al., 2020).
The opposi e is when he cu en liabili ies a e highe han he cu en asse s which means ha eco e y is low, and he
o ganisa ion is illiquid, unable o co e i s liabili ies and needs o ind o he means – bo owing o acqui ing mo e
capi al in es men s – o co e i s unde - eco e y. This si ua ion o illiquidi y is displayed by a a io ou come o less han
1 (Lanckswee d e al., 2021). The a io used in he calcula ion is he cu en a io and is calcula ed as ollows:
𝑇𝑜𝑡𝑎𝑙 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 (1𝑎)
𝑇𝑜𝑡𝑎𝑙 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 (1𝑏)
To al cu en asse s = in en o y + accoun s ecei able + cash (1a)
To al cu en liabili ies = accoun s payable + sho - e m liabili ies (1b)
An illiquidi y p oblem is gene ally due o he ollowing easons: he in en o y is sold a a lowe alue han i s pu chases
o he added alue on he in en o y is o e he ma ke p ice. This esul in accoun s ecei able a e no paid o ha e
become long o e due; accoun s payable a e equi ed much ea lie o hey a e highe han he in low o e enue. Sho -
e m bo owings a e o e and abo e income gene a ion esul ing in high ope a ing expenses.
The inancial heo y o wo king capi al managemen o NPOs is ela i ely new compa ed o he con en ional wo king
capi al managemen o o -p o i businesses, which was de eloped by Ka l Ma x in he 19 h cen u y (Opeoluwa, 2021).
The NPO e sion was pa ly colla ed by Richa d Wach in 1984 so i s academia is only jus unde ou decades old and
e ol ing. The e o e, no many esea ch s udies ha e been unde aken in Sou h A ica o e en globally.
In Sou h A ica, he Non-p o i O ganisa ion Ac was only p omulga ed in 1997 wi h he i s o ganisa ion egis e ing
only in Sep embe 1998, hus, he sec o is new and eme ging (DSD, 2022). The e o e, he a ea o s udy is limi ed and
e e y new s udy in inance adds o he body o knowledge abou NPOs.
2.2. Wo king Capi al Li e a u e o e iew
Zie low e al. (2018) ou line an app op ia e liquidi y a ge , which se s ou a liquidi y a ge ange o NPOs o es ablish.
They also go on o ques ion he ‘ a iance analysis’ and ‘si ua ion analysis’ which should be done in “conjunc ion wi h
a ios and o he indica o s” (Zie low e al., 2018:369). The equency o policy assessmen is based on job e ec i eness
and measu es in e ms o pe o mance and success.
Zie low e al. (2018) go on o di ec ha he p o icien inancial managemen o NPOs equi es he cons an e iew o
he o ganisa ion o make co ec i e changes o lead o be e pe o mance. Any liquidi y issues iden i ied igge he
need o an adjus men o liquidi y policies, which will edi ec co po a e objec i es and o mula e plans o o e come
he h ea s. The e o e, o ganisa ions need o unde go equen e alua ions and e iews o iden i y hese h ea s. Zie low
e al. (2018) iden i y six key a eas o inancial policies: go e nance, accoun abili y, liquidi y managemen , und aising,
isk managemen and human esou ces. A “ inancial heal h e alua ion” assessmen is a ailable o NPOs (Zie low e al.,
2018:692-693).
Acco ding o Cho o’s (2019) s udy on he sus ainabili y o NPOs in Sou h A ica, he main pu pose o NPOs in Sou h
A ica is o add ess he huge inequi y gap ha is expe ienced in he coun y. The s udy examined he inancial
pe o mance d i e s, which a ec liquidi y. The Cho o s udy ound de iciencies in Sou h A ican NPO managemen
s a egies, which esul ed in a low le el o s ainabili y and equi ed mo e d i e by managemen . I was also es ablished
ha NPO manage s did no ully unde s and he inancial sus ainabili y o hei o ganisa ions. They also did no ake
in o conside a ion he impac o changes wi hin he coun y’s policies and economic unce ain y as ac o s in he
sus ainabili y o hei NPOs. Long- e m inancial sus ainabili y, which needs o be add essed in ea nes , was low on hei
lis o impo ance.
Wo ld Jou nal o Ad anced Resea ch and Re iews, 2025, 27(02), 1718-1729
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Ebeneze e al. (2020) conduc ed a esea ch s udy in Ghana, which indica ed he impo ance o sound inancial
managemen p ac ices o he inancial sus ainabili y o hei NPOs. This was eemphasised in a c oss-coun y s udy by
Al a e al. (2019) which showed ha in e nal con ol measu es a e key su i al mechanisms o NPOs in A ica. The
s udy by Ahmad e al. wen on o emphasise ha A ica has he wo ld’s la ges numbe o bene icia ies o NPOs in he
wo ld and ha he su i al o NPOs is c i ical o he con inen .
In Sou h A ica, a s udy by Maboya and McKay (2019) ound ha only 20% o hei esponden s unde s ood he
impo ance o inancial sus ainabili y. This gap is clea ly a law in he sec o , and i is impo an o unde s and whe e i
is and how i can be co ec ed o bene i he sec o .
Yao and Deng (2018) examined he implica ion o managemen incen i es o he accoun s ecei able policy. They aimed
o unde s and i incen i es o managemen had an impac on accoun s ecei able and i his would lead o agg essi e
o passi e collec ions. The speedy collec ion o accoun s ecei able uels wo king capi al, which allows o sha eholde
alue inc ease o in es men and g ow h wi hin an o ganisa ion. The passi e collec ion me hod achie es none o he
g ow h objec i es bu me ely allows an o ganisa ion o main ain i s cu en ajec o y. The indings we e ha incen i es
a ec managemen decisions on policy decision-making and play a ole in deciding he policy ha an o ganisa ion
should ake. The s udy ecommended ha incen i e se ing should be app oached cau iously as i could impac an
o ganisa ion’s g ow h o cu en pe o mance.
Rasyid e al. (2018) ci e ha p uden manage s apply a conse a i e wo king capi al policy due o isk and hei being
ansac ional manage s while op imis ic manage s apply an agg essi e policy which leads o highe isk and ewa d.
The ela ionship ha de e mines which ideology o p ac ice o ollow is based on he agency heo y, which desc ibes
he ela ionship be ween he o ganisa ion and he manage . Thei s udy goes on o desc ibe he eason o his
ela ionship, which hinges on he manage ’s sel -in e es compa ed o ha o he o ganisa ion. The alignmen o bo h is
conside ed an impo an a iable in achie ing a single economic agenda ha allows o he p og essi e g ow h and
pe o mance o he o ganisa ion.
Nji u and Gi hinji-Mu ii hi (2018) conduc ed a s udy, which add essed he p ope inancial managemen policies ha
had an impac on he imp o emen in he inancial pe o mance o 45 non-go e nmen al o ganisa ions in Kenya. The
s udy s a ed ha he pu pose o inancial managemen policies was o he de elopmen and implemen a ion by an
o ganisa ion’s managemen whose o e all aim was o p o ec he inancial esou ces o he o ganisa ion. They also
s a ed ha o ganisa ions should egula ly e iew, e ise, documen and es he inancial con ol o hese policies o
es ablish hei s eng h. The s udy also ound ha despi e hei s a complemen being well quali ied and expe ienced,
egula e alua ion and pe o mance epo s we e no p epa ed. The o e all ou come o he s udy was ha inancial
planning a ec ed inancial pe o mance and changes made imp o ed he o e all pe o mance o o ganisa ions. This
was s essed by he ac ha he ou come was based on egula e iews which esponded o he u gen challenges o
eme ging isks and allowed o speedy co ec i e measu es and imp o emen s.
Da ’s (2021) s udy was on he oles o he chie inancial o ice (CFO) in an NPO. The oles, hei unc ions based on
impo ance, encompassed ou signi ican hemes – p o ec o , suppo e , inno a o and s a egis . I was also no ed ha
he ole o a CFO, based on expe ience and ac i i ies, di e s among o ganisa ions. The s udy highligh ed ha he CFO
ole was mo e inclined o be a p o ec o ole han an inno a o . The ole ocused on s a egy and concen a ing on he
o ganisa ion’s mission. The suppo ole o his unc ion me ely assis ed wi h decision-making and wo king behind he
scenes o suppo he mission o he o ganisa ion. Financial pe o mance and being inno a i e wi h ad ancemen in
policies we e no conside ed signi ican which is in o al con as o ha in o -p o i o ganisa ions (Wu e al., 2019).
Based on Da ’s s udy, an o ganisa ion’s e ec i eness is cha ac e ised by he CFO’s ole and esponsibili y.
The s udy by Bassey e al. (2016) on Nige ian banks es ablished ha he e was a ela ionship be ween e icien and
e ec i e liquidi y managemen and pe o mance. Pe o mance managemen has many ma ices and he one mos
sui able o liquidi y managemen is he sco eca d me hodology. They ecommended ha enhanced implemen a ion o
policy ools should be used o achie e he desi ed liquidi y le els.
2.3. Regula o y and s a u o y compliance
As NPOs a e public o ganisa ions in Sou h A ica, hey a e egis e ed and legisla i ely egula ed unde he NPO Ac 71
o 1997 (NPO, 2022). Thei egula ion is supplemen ed by a ious o he legisla ion ( he Income Tax Ac 58 o 1962, he
Companies Ac 61 o 1973, he Fund aising Ac 107 o 1978 and he T us P ope y Ac 57 o 1988) which complemen s
hei egis a ion (NDA, 2022). The DSD is he ul ima e cus odian o NPOs in Sou h A ica.
Wo ld Jou nal o Ad anced Resea ch and Re iews, 2025, 27(02), 1718-1729
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As pa o hei ac i i ies and equi emen s, NPOs need o main ain hei non-p o i s a us and a e equi ed o submi
an annual inancial s a emen (AFS) yea ly o he DSD o e ain hei s a us and ensu e compliance. They a e guided by
a code o good conduc , as hey a e public-se ing o ganisa ions. The NPO Ac aligns wi h Sec ion 30(1) o he Companies
Ac , which s ipula es ha he AFS mus be p epa ed wi hin six mon hs a e he inancial yea -end (SACA, 2023).
Fu he o compliance, o ganisa ions need o ensu e ha he AFS is complian and acco ding o s a u o y egula ion,
which means ha , hey need o adhe e o he In e na ional Financial Repo S anda ds (IFRS) o small and medium-
sized en i ies (SMEs). This egula es he decla a ion o he o ganisa ion’s ‘going conce n’ s a us which is he liquidi y
s a us o he o ganisa ion going o wa d as decla ed in he AFS.
The signing o he AFS equi es a boa d mee ing, which is de ined as he annual gene al mee ing (AGM) and is held
yea ly. The IFRS o SMEs ecommends ha , based on he size o he o ganisa ion, he equency o mee ings can be
in e nally de e mined bu he manda o y one is he AGM, which is co e o signing o he AFS (IFRS, 2019). This is also
in line wi h he Company’s Ac as a egula o y and, he e o e, s a u o y guideline.
This equency o mee ings is me ely a guideline o compliance. An o ganisa ion needs o assess and de e mine i s
needs. Con a ily, a publicly aded o ganisa ion, which is egis e ed on he secu i ies exchange, has a much highe
equency o mee ings o discuss i s esul s and pe o mance be o e hese a e communica ed o he public o ex e nal
bodies. Thus, publicly aded o ganisa ions ha e he oppo uni y o guide hei businesses mo e obus ly and change
he ajec o y o he pe o mance o hei o ganisa ions i i is no wi hin he objec i es.
The oppo uni y he e is o allow o policy changes in a ious a eas such as budge adjus men s based on new o ecas s,
changes in hedging policy due o changes in exchange a e mo emen s o igh ening o deb o policies due o mone a y
changes wi hin he economy and holding back on capi al changes policy due o ad e se economic changes. The highe
equency o mee ings allows o p oac i e managemen in ol emen o discuss changes and assess he o ganisa ion’s
liquidi y and inancial ci cums ances.
3. Resea ch me hodology/app oach
3.1. Resea ch app oach
The na u e o his s udy was quan i a i e, so he s udy adop ed a mono-quan i a i e esea ch me hod – a su ey. The
esul s o he su ey we e compa ed agains heo e ical wo king capi al managemen policy and liquidi y pe o mance
measu es. Due o he geog aphic as ness o he da a accumula ion, he mos e ec i e op ion was he use o a su ey
ques ionnai e ha he sample popula ion had o comple e and e u n (Leedy & O m od, 2016). The da a we e hen
analysed wi h a s a is ical so wa e p og am o compa ison and co ela ion.
The deciding ac o in he choice o esea ch philosophy – posi i ism, p agma ism, pos mode nism, in e p e i ism o
c i ical ealism – was he esea ch ques ion. This s udy en ailed he collec ion o da a om a ious wel a e o ganisa ions
in di e en s a a o he coun y. The da a hen had o be compa ed o a se o heo e ical models and policies wi hin
he inance a ena. As his was a s udy o esea ch da a compa ed o a ac ual ou come aimed a esol ing he esea ch
ques ion, posi i ism was he mos app op ia e philosophy o choose.
The app oach – deduc ion, induc ion o abduc ion – ha bes sui ed his s udy was deduc ion as he s udy in ol ed
es ing cu en heo ies. P obabili y sampling, which en ailed s a i ied andom sampling om all nine p o inces o
Sou h A ica, was used. As he s udy en ailed con ac ing people and, despi e his being done elec onically, a submission
o e hical clea ance was sen o he uni e si y’s scien i ic commi ee o e iew and app o al. The applica ion en ailed
a ques ionnai e and a de ailed p oposal o he su ey design and me hodology. The s udy was de e mined o be low isk
and clea ance was g an ed, hus, acili a ing he execu ion o he esea ch s udy.
De ails o he sample popula ion we e ob ained om he DSD websi e a he beginning o May 2022; 257 578 egis e ed
o ganisa ions – he ull popula ion o all NPOs wi hin Sou h A ica – we e lis ed. The esea ch ques ion was designed o
ocus only on he wel a e o ganisa ions because he con ibu ion his sec o makes o o e 18 million people in he
coun y is signi ican and he bene i i p o ides is li e c i ical.
A de ailed analysis o he o al popula ion e ealed ha 95 304 wel a e o ganisa ions co e ed all nine p o inces o he
coun y. The s udy a ge ed o ganisa ions, which had audi ed inancial s a emen s, as he ocus was o ob ain liquidi y
le els and wo king capi al policy da a. A e iew was done, and i was ound ha he Na ional Lo e y Commission (NLC)
p o ides unding o wel a e o ganisa ions and hei AFS o 2020 e ealed a bene icia y lis (NLC, 2022). This was
Wo ld Jou nal o Ad anced Resea ch and Re iews, 2025, 27(02), 1718-1729
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ob ained om he NLC websi e (NLCAFS, 2022). This hen o med he basis o he sample and esul ed in he a ge
sample o he s udy.
Due o he geog aphical loca ion o he sample – he esponden s being sp ead h oughou he coun y, an e ec i e
sampling ool – e ec i ely managed and deli e ed o he sample pa icipan s – needed o be used. Based on he ele an
ac o s (cos , geog aphic loca ion o pa icipan s and ime in e ms o he u na ound o in o ma ion collec ion), he bes
op ion was he use o a sample su ey. The mos e ec i e way o deli e his su ey was ia he In e ne . The su ey
was sen o all chosen pa icipan s ia elec onic mail and hei esponses we e eques ed wi hin a speci ied ime. This
me hod acili a ed he co e age o he la ge geog aphical a ea and ensu ed ha speedy deli e y and submission we e
a ained.
3.2. Resea ch execu ion and analysis
The s udy conside ed he eliabili y and alidi y o he ins umen by conduc ing a C onbach’s alpha es . This con i med
ha he ins umen me he ques ionnai e eliabili y c i e ion. The ques ionnai e o ma was adop ed om ea lie
s udies done on wo king capi al managemen in he Uni ed S a es, Canada, Aus alia and Pakis an. The ques ionnai e
ins umen is a es ed ool o his ype o esea ch s udy; he e o e, a ull-blown pilo s udy was no needed o e es
he ins umen . A limi ed-scope pilo was done o es language and o de e mine whe he he ques ionnai e ins umen
could be adminis e ed elec onically as he p e ious s udies had been pape -based and had used con en ional pos al
se ices.
The p obabili y sampling a ge op ion, which ollowed he “decision ee sampling” op ion o Saunde s e al.
(2019:316), was used. This led o he p ocess o selec ing a s a i ied andom sample om he a ge popula ion ha
had been chosen om he nine Sou h A ican p o inces. This ga e each p o ince a ep esen a ion in he chosen sample
and p o ided a s a i ied ep esen a ion o he o al a ge sample o wel a e o ganisa ions wi hin Sou h A ica. O he
o al sample, 626 esponden s we e chosen om he a ious p o inces, co e ing a p opo ional alloca ion o 43%. A
10% esponse bias was included in he sample selec ion.
Once he sample selec ion was de e mined, he da a collec ion me hod was e ined. The bes op ion was o use an
elec onically execu ed sample su ey so Google Fo ms, an online su ey applica ion, was used o build he su ey
ques ions and adminis e he applica ion. I was es ablished ha he collec ion o he da a would accumula e wi hin he
Google Fo ms applica ion.
When he su ey was comple ed, he da a we e ans e ed o SPSS o analysis and compa ison. The su ey,
accompanied by a co e le e which explained he bene i o he su ey o he esponden s and hei op ional and
anonymous pa icipa ion, was sen ou o a esponse du a ion o 30 days. An email was sen ou 10 days be o e he end
o he su ey o emind pa icipan s o comple e he su ey and hank hose who had al eady pa icipa ed.
The s udy used desc ip i e s a is ics o he analysis o he gene al in o ma ion om he su ey ques ionnai e – yea s
o expe ience, quali ica ion, posi ion and age o he esponden . The main da a we e analysed o no mali y o decide
which co ela ion es o adminis e . Based on he ou come, Spea man’s ho was un o co ela ion among he a iables
due o he da a iola ing he no mali y assump ions. The ela ion be ween he a iables needed o be unde s ood in
e ms o signi icance and associa ion, he e o e, he chi-squa e, phi and C ame ’s V es s we e un on SPSS. This was o
de e mine which hypo heses would pass.
The objec i e o his s udy was o examine he impac o he equency o policy e iews on he liquidi y le els o NPOs
in Sou h A ica. This was complemen ed by also ob aining an unde s anding o he ypes o policy used he equency o
e iews and he decision-make s o hese policies which all ea u ed in he su ey ques ionnai e. This o med he basis
o he analysis and led o he esul s o he s udy.
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4. Resul s and discussion
4.1. Resea ch analysis
The esea ch achie ed a 63.29% esponse a e, which is accep able o analysis acco ding o Saunde s e al. (2019:302-
305). This was equally dis ibu ed o e all he s a a/p o inces, anging om 58% o 73% o esponden s. The
esponden s included 96.7% o indi iduals om he inance communi y which was he desi ed esponse popula ion
a ge ed as he na u e o he s udy was wi hin he inancial a ena. O his, mo e han 36.9% we e g adua es and 59.3%
we e pos g adua es – hus, quali ied indi iduals. This ep esen ed a well-educa ed inance g oup o esponden s. The
su ey was he e o e success ul and p o ided a ga eway o es he esea ch ques ion by analysing he accumula ed
da a.
The es ing o he main hypo hesis was subjec o unde s anding he ela ionship be ween policy e iew equency and
he liquidi y le el o NPOs in Sou h A ica. The da a we e es ed o no mali y and, acco ding o he Kolmogo o -Smi no
and Shapi o-Wilk es s, he p < 0.001 mean ha he da a we e no no mally dis ibu ed, indica ing ha he null
hypo hesis should be ejec ed om Mohanlal (2023) (Table 1).
Table 1 Tes o da a no mali y
Tes o No mali y
Kolmogo o -Smi no
Shapi o-Wilk
S a is ic
d
Sig.
S a is ic
d
Sig.
Responden P o ince
0.170
396
<0.001
0.917
396
<0.001
Liquidi y_A2
0.418
396
<0.001
0.603
396
<0.001
a. Lillie o s Signi icance Co ec ion
The es ing o he hypo hesis was conduc ed wi h he chi-squa e, phi and C ame ’s V es s o es o an associa ion
be ween he equency o policy e iew and he liquidi y le el. The chi-squa e esul was a p = < 0.001 which e ealed
ha he e was an associa ion be ween he a iables and ha hey we e dependen on one ano he – ejec ion o he null
hypo hesis (Table 2). The e ec size was measu ed by he phi and C ame ’s V es s which we e 0.342 and 0.197,
espec i ely, meaning ha he e was a small e ec be ween he wo a iables (Table 2).
Table 2 Hypo hesis s a is ical es
Chi-Squa e Tes s
Symme ic Measu e
Value
d
Asympo o ic
Signi icance
(2-sided)
Value
App oxima e
Signi icance
Pea son Chi-Squa e
46.285³
12
<0.001
Nominal by Nominal
Phi
0.342
<0.001
Likelihood Ra io
28.405
12
0.005
C ame ’s V
0.197
<0.001
Linea -by-Linea
Associa ion
12.046
1
<0.001
N o Valid Cases
396
N o Valid Cases
396
a. 13 cells (65.0% ha e expec ed coun less han 5. The minimum expec ed coun is ,14.
To u he unde s and he associa ion be ween he policy equency e iew and he liquidi y le el among he a ious
equencies, a c oss abula ion was ex ac ed om SPSS (Table 3).
Wo ld Jou nal o Ad anced Resea ch and Re iews, 2025, 27(02), 1718-1729
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Table 3 Liquidi y le el based on equency o policy e iew o wel a e NPO’s
Liquidi y Le els
Policy e iew equency
<1
=1
>1 bu <2
>2
To al
Mon hly
0.0%
0.0%
0.0%
100.0%
100.0%
Qua e ly
0.0%
50.0%
50.0%
0.0%
100.0%
Hal yea ly
25.0%
0.0%
37.5%
37.5%
100.0%
Annually
44.1%
20.9%
29.1%
5.9%
100.0%
Whene e necessa y
50.0%
30.8%
11.5%
7.7%
100.0%
To al
43.7%
21.2%
28.0%
7.1%
100.0%
An analysis o Table 3 e eals ha 43.7% o all he wel a e NPOs sampled ha e a liquidi y le el o < 1 which means ha
hey ha e a liquidi y p oblem based on he a io in e p e a ion (Lanckswee d e al., 2021). Only 35.1% ha e a s ong
liquidi y le el o o e 1(ca ego ies o >2 and >1 bu <2). A mon hly e iew o he wo king capi al policy achie es a
liquidi y le el o > 2 o 100% o he sample popula ion. When he equency le el d ops o qua e ly e iews he
liquidi y le el sees a spli o 50% be ween ‘> 1 bu < 2’ and = 1. When he policy e iew equency mo es o wice a yea ,
he ou come is spli be ween 37.5% achie ing > 2 and ‘> 1 bu < 2’; he emaining 25% o he sample achie es a < 1
liquidi y le el. When he equency inc eases o annually, he esul s e eal ha only 5.9% achie e a liquidi y le el o >
2, 29.1% ‘> 1 bu < 2’, 20.9% = 1 and 44.1% < 1. Finally, he whene e app oach achie es he highes o he sample
esponden s (50%) a a < 1 liquidi y le el.
When he highes equency o policy e iew is compa ed wi h he lowes , he esul e eals a huge con as . When he
equency o e iew is done mon hly, 100% o he sample popula ion achie es he bes le el o liquidi y – which is > 2;
when o ganisa ions only e iew hei policies annually, o e 44% ha e a < 1 liquidi y le el and o e 20% ha e a = 1
liquidi y le el. Based on hese wo ca ego ies, o e 60% o he o ganisa ions which e iew hei policy yea ly ha e e y
poo liquidi y in compa ison wi h o ganisa ions wi h mon hly e iews.
An analysis o he wo ex emes e eals he ollowing: a mo e om mon hly e iews o qua e ly e iews e lec s ha
50% o he sample esponden s main ain a liquidi y le el o > 1 while he balance jus makes liquidi y b eake en o = 1.
When he equency inc eases e en u he o hal -yea ly e iews, only 25% o he esponden s show a liquidi y le el
o < 1 – a b eak in he ajec o y, while a longe equency o annual e iews has a highe le el o poo liquidi y. Finally,
a “whene e ” app oach achie es he weakes le el o liquidi y – based on mo e han 80% o he esponden ’s choice. I
is e iden ha as he equency o e iews inc eases so does he liquidi y pe o mance o wel a e NPOs in Sou h A ica.
The su ey e iewed wo o he ac o s, which impac policy e iews and liquidi y le els: he decision-make s o he
policy and he ypes o policy he o ganisa ion implemen s. The esponse a e o policy ypes was he o mal policy a
82.8%, no policy a 13.4% and in o mal policy a 3.8%. This indica es ha he majo i y o NPOs adop a o mal policy
app oach o manage hei wo king capi al. This con i ms ha o ganisa ions a e ope a ing e y s uc u ally and a e
based on s a u o y compliance equi emen s.
Based on he esponses o he policymake s o Sou h A ican wel a e NPOs, depic ed in Table 4, he boa d o
managemen is only esponsible o 9.8% o he sample esponden s ha a e in ol ed in policy decision-making. This
is ollowed by he chie execu i e o ice (CEO) (0.5%) and he CFO (7.3%). The la ges ca ego y o policy decision-
make s is he inance commi ee, which is made up o 80.6%. The inal wo a e he p esiden /chai man and easu e
which a e 1% and 0.8%, espec i ely.
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Table 4 Policy decision-make s o wel a e NPO’s
Policy_Se up
Valid Pe cen
Cumula i e Pe cen
Boa d o Managemen
9.8%
9.8%
Chie Execu i e O ice
0.5%
10.3%
Chie Financial O ice
7.3%
17.6%
Finance Commi ee
80.6%
98.2%
P esiden /Chai man
1.0%
99.2%
T easu e
0.8%
100.0%
An analysis o he esponses, show ha indi iduals in ol ed in sole decision-making, such as he CEO, CFO,
p esiden /chai man and easu e combined, a e unde 10% o he o al esponse a e. O e 90% o he esponses
dic a e ha policy decision-making is done by a collec ion o indi iduals – he boa d o managemen (9.8%) and inance
commi ee (80.6%). This ela es o s a u o y compliance as e lec ed in he s a u o y equi emen s o ced by he
accoun ancy equi emen o IFRS o SMEs and he legisla i e equi emen s o he NPO Ac .
4.2. Policy e iew equency and he impac on liquidi y le els
The liquidi y le el o wel a e NPOs in Sou h A ica is impac ed by he a iables in policy e iew equency, policy ype
and policy decision-make s. Fi s , mos o he o ganisa ions (82.8%) ollow a o mal policy managemen app oach o
he unning o hei o ganisa ions, which is good om a s uc u al and compliance poin o iew. This is u u e-cemen ed
by he ac ha policy decision-making is concen a ed on a collec ion o indi iduals – inance commi ees (80.6%).
F om a policy egime pe spec i e, his poin s o he ac ha o ganisa ions a e s uc u ed and collec i ely con olled.
A look a how o en his collec ion o indi iduals comes oge he o e iew policy e eals ha o e 90% o hem only
mee annually o e iew policies. O ganisa ions ha ha e annual policy e iews pe o m he wo s in e ms o liquidi y
because o e 60% o hem ha e a low le el o liquidi y. This con as s wi h o ganisa ions ha ha e a highe equency
o e iews which ha e a 100% a e o liquidi y le el g ea e han 2. As he equency in e al inc eases om annual
e iews o mon hly e iews, he liquidi y le els o wel a e NPOs in Sou h A ica inc ease.
Acco ding o IFRS o SMEs, an o ganisa ion is equi ed o hold a leas one o mal mee ing o he boa d o managemen
and i s inance commi ee o app o e he AFS o an o ganisa ion. A his mee ing, he no es o he AFS, including policy
changes o accoun ing policy adjus men s, mus be con i med. As mos o ganisa ions make e iew changes o hei
policy annually, his is he mos likely mee ing ha akes place o discuss he ou come o he p e ious yea and possible
ad ancemen o he coming yea and whe e policies a e e iewed and adjus ed i equi ed.
This, he e o e, implies ha policy e iews a e a mo e s a u o y ask, like he signing o he AFS, which is egula ed by
accoun ing egula ions and he NPO Ac . So, as a esul , poo liquidi y-pe o ming o ganisa ions emana e om
o ganisa ions pe o ming hei s a u o y unc ion. On he con a y, o ganisa ions which mee mo e egula ly –
qua e ly and mon hly – ha e much highe liquidi y le els compa ed o he annual o ganisa ion e iewe s. This con as
is e y clea in Table 3.
Zie low e al. (2018) ecommend ha he inancial e alua ion o an o ganisa ion’s policy mus occu egula ly o ensu e
ha economic, poli ical and mone a y ac o s a e aligned wi h app o ed ini ial policies. They also s a e ha all in e nal
ac o s need o be assessed o ensu e ha all ope a ion policies a e aligned wi h he o ganisa ion’s objec i e. This
p o ides an o ganisa ion wi h he obus alignmen o all in e nal and ex e nal ac o s and, hus, i s en i e hough
p ocess is aligned. O ganisa ions ha ollow a highly equen e iew o hei policies a e mo e obus and able o
achie e much be e liquidi y le els. Howe e , he ac ha hese e alua ions need o be done by he en i e collec ion o
commi ee membe s o en means ha equency is comp omised.
Zie low e al. (2018) iew is u he complemen ed by Nji u and Gi hinji-Mu ii hi's (2018) s udy which ound ha
inancial planning and equen e iews esul in imp o ed o e all o ganisa ion pe o mance. They ci e ha wi h
egula e iews, o ganisa ions can espond o he u gen challenges ha assail hei o ganisa ions. This could also lead
o he de e mina ion o any eme ging isks o he o ganisa ion. A e such a e iew, policymake s can adjus hei
