ABSTRACT

This study sought to identity the effects of trade credits on the overall performance small-scale businesses with special emphasis on their volume of sales and profit maximization as well as the problems and prospects of trade credits on the small-scale businesses. Data were collected on specific items and hypotheses of the study. Instruments used for this research work were personal interviews, literature surveys and questionnaires. The data were collected, collated presented and analysed with simple statistical tools, namely descriptive table and percentages. Hypotheses testing involved is chi-square. Records exist to show that small-scale businesses offer trade credits to their tested and proven customers. This, as was discovered has contributed to a large exent to the profit maximization of the company. However, the incidence of had debts, shortage of working capital and the consequent liquid on have been found to be caused by the ineffectiveness of some small-scale businesses in holding tenaciously their credit policies. Besides, the high level of default in settling debts associated with some customers has also been discovered to be caused by the economic conditions prevalent in the country. This no doubt, results in the customer inability to settle their accounts as at when due, coupled with their dubiousness and the incidence of unforeseen circumstances that occur after the disbursement of goods. These findings have led to the conclusion that success in arresting the rising incidence of bad debts, shortage of working capital, court cases and other ills associated with trade credits in small-scale businesses lie in the ability of the firms to fashion out workable credit administration procedures and following to the core, the XII implementation of those procedures and making sure that they only extend credits to businesses, organizations and individuals with whom they have had cordia business relationships or they are very knowledgeable in.