Impact Of Credit Management On Profitability Of Manufacturing Firm (A Study Of Unilever Port Harcourt)

ABSTRACT

Nelson (2012) credit engagement as simply the means by which an entity manages its credit sales. It is a prerequisite any entity dealing with credit transactions since ii is impossible to have a zero credit or delimit risk. Myers and Briales (2012) opine that credit management is a methods and strategies adopted by a firm to ensure that they maintain an optimal level of credit and effective management. Nzotta (2010) opines that credit management greatly influences the Failure of financial institutions. Ibis is because the failure of a firm is influenced to a large extent by the q tull ii v of credit decisions and thus the quality of the risky assets. Credit management is concerned primarily with managing debtors and financing debts. 'Ihe objectives ol' credit management can be stated as it helps in sale guarding c0mpanieS investments in debtors and optimizing operational cash I1o\\ s. Credit Management can be viewed as written guidelines that set the terms and condo ions lr supplying goods on credit, customer quali lication criteria. procedure for making collections, and steps to be taken in case of customer delinquency (Wikipedia. 201 0).Credit management can be define as a lunction within an organization to improve and control credit policies that will lead to increased revenues and lower risk including increasing collections. reducing credit costs, extending more credit to creditworthy customers and developing competitive credit terns. It can also be called credit control (13a1ogun. 2009)Credit management is implementing and maintaining a set of policies and procedures to minimize the amount of capital lied up in debtors and to minimize the exposure of the business to bad debts 8 (http://wwv. Briefs/ brief-- management. Credit Management. from a debtor's point is managing finances especially debts so as not to have a tail of creditors lurking behind your Hack. (credit management is a responsibility v that both the debtor and the creditor should seriously take ( Adekunlc.20 I 0)