Asian Journal of Economics, Finance and Management

Financial sustainability of micro and small businesses is a pressing issue with significant implications for local economies and employment. Profit margins in the cleaning sector remain low, averaging 10–15% due to high competition and low pricing strategies. This study examined the effect of working capital management on the financial sustainability of micro and small cleaning enterprises in Kakamega County, Kenya, focusing on cash flow, credit, and inventory management. The study was anchored on the Resource-Based View, Keynesian Liquidity Preference, Credit Risk, and Economic Order Quantity theories. Using an explanatory research design, data were collected from 243 registered enterprises through structured questionnaires, combining qualitative and quantitative approaches. Descriptive statistics and inferential analysis, including correlation and multiple regression at the 5% significance level (p<0.05), were applied. The findings revealed that cash flow, accounts receivable, accounts payable, and inventory management significantly influenced financial sustainability. Effective cash flow management enabled enterprises to meet operational costs and make informed investment decisions. Proper management of receivables sustained cash inflows, while prudent handling of payables strengthened relationships and minimized costs. Efficient inventory management reduced risks of overstocking or stockouts. These results provide actionable insights for managers of small cleaning enterprises and policymakers seeking to enhance the sector’s financial resilience.