The study was carried in Arua City main market on the topic of cash management and financial performance of SMEs with a sample of 28 making 100% composition. The study found out that cash management had a grant Mean of 2.31 and Standard deviation of .82 which shows a low level of cash management in Arua City main market. This is mainly attributed to inadequate financial management training by city management (department of commercial services). The study found out that financial performance of SMEs had a Grand Mean of 3.79 and Standard deviation of .42, which shows high level of financial performance of SMEs in Arua City main market. This finding shows that market vendors do not get adequate trainings of business management in the areas of credit management and cash management from Arua City commercial department. The study revealed that cash management has strong positive influence on financial performance of SMEs in Arua City main market w indicated by the Rvalue of 0.329 at a sig F of 0.167 which is higher than 0.45, a level of significance there accepting the Alternative Hypothesis. This means it is not only cash planning, credit management and cash position that should be applied to improve financial performance of SMEs in Arua City main market but also other factors like book keeping and financial reporting should be considered for improving financial performance of SMEs in the main market. Therefore, the Null Hypothesis is rejected and the alternative Hypothesis that is accepted. In conclusion Arua City main market SMEs apply low cash management strategies hence needs to consider other factors of book keeping and financial reporting to improve financial performance of SMEs in Arua City main market. Following the above Free cash flow theory, that asserts that management has the responsibility of holding cash to gain control over it in making investment decisions (Huseyin 1997). When cash is readily available, investment is made easier by the managers. The management must always ensure that it invests in activities which maximize the shareholder`s returns. By holding sufficient amount of cash, the management guaranteed in the investment, in growth project due to the availability of funds, hence improved financial performance.