The Effect Of Credit Management On The Financial Performance Of A Company (A Case Study Of New Vision Printing And Publishing Company)

ABSTRACT

Finance is the lifeblood of a business. All business needs cash to operate

efficiently. However, companies may not have all the cash they need to

finance their operations. On the other hand, companies need to

maintain and get more clients in their business. Though not all clients

have cash to pay for what they need, credit is offered to them and they

pay at a later date.

In this study, the researcher wanted to establish the relationship

between credit management and performance. The study was based on

the research objectives which were to examine the credit management

policy of the New Vision Printing and Publishing Company, by

establishing the criteria to be followed when extending credit to clients

and to examine the relationship between credit management and

financial performance.

The purpose of the study was to establish the effectiveness of credit

management on financial performance of the New Vision.

The research was analytical and descriptive in the nature and was based

on interviews, observations and questionnaires. A survey population of

40 employees was used. The researcher used purposive sampling

technique. The research was based on primary and secondary data.

The researcher intended to examine whether there is a relationship

between credit management and the financial performance of the New

Vision Printing and Publishing Company.

It s a normal practice that the company gives credit to its clients that it is

both new and existing ones. A big percentage of clients are given a

credit period of only one month. The criteria used in collecting debts are

mainly constant reminders and timely preparation and delivery of

invoices.

It is important to note that relationship between credit management and

financial performance exists in that if the credit control department

relaxes and or becomes very strict, the financial performance will be

negatively affected. If they relax, the debtors will not pay. If they

become over strict they will stop sales orders which will limit the flow of

revenue. Therefore, the credit control department should be moderate in implementing their policies.