Effect of Receivable Management on Performance of Small Scale Manufacturing Companies in Kiambu County in Kenya. Mutiso, A.

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.