Effect Of Trade Credit On The Performance Of Small And Medium Scale Enterprrises In Nigeria ( A Study Of Selected Firms In Abia State ):- Philip Ozichi P

ABSTRACT

Small and medium scale enterprises are constantly faced with the challenges of obtaining funds for their establishment and expansion. This research work was embarked upon to buttress the effect of trade credit as a source of finance and how it can be effectively managed to guarantee efficient/returns. Government contributions in ensuring credit availability, sources of finance available to small-scale enterprises and management of trade credit was also discussed. Data was collected using both primary and secondary sources which included questionnaire, personal observation, textbooks, etc. The data collected were presented and analyzed in tables using chi-square statistical tool, and it was revealed that trade credit is a suitable source of finance to small and medium scale businesses and it also contributes to their profitability. Entrepreneurs and management were recommended to. obtain trade credit to launch their businesses to the next level instead of relying heavily on formalized sources of finance. They should also obtain credit that is relatively proportionate to the size of their business to avoid existence of idle fund. Also, efforts should be made in maintaining prompt payment of invoice to reduce credit risk, as this will ensure greater returns in the long run.