Abstract:
The manufacturing sector has been identified as a key pillar to achievement of
economic development of any country. The small scale manufacturing companies in
particular have attracted attention of Kenya government as a key source of
employment and economic stability. Small scale companies are however faced with
problems which threaten their success and survival due to their small size. In this
regard the government of Kenya has committed a lot of resources to facilitate success
of these entities but there is evidence to the effect that they do not grow to become
middle or large scale companies as anticipated by the government. In line with these
failures, this study sought to assess the effect of goods receivable management on
performance of small scale manufacturing companies in Kiambu County, Kenya.
Descriptive cross-sectional survey design using both quantitative and qualitative data
was used to guide the study. Primary data was collected with the help of self-
administered questionnaires from a sample of randomly selected six small scale food
processing firms. Two hypotheses were tested using spearman’s correlation and
Kruskal-wallis tests. The study established that the sampled firms had challenges in
implementing goods receivable management practices. A weak positive relationship
was observed between credit standard, credit terms, collection efforts and
profitability, while a weak negative relationship was observed between credit
selection and profitability. Monitoring of receivables had a strong positive
relationship with profitability. It is recommended that these firms should engage
qualified, full time credit managers to support their operations and potentially
facilitate growth of their firms to middle or large scale enterprise.
