Kenneth Enoch Okpala, Chinsunum Osanebi, Ademola Irinyemi


Extant literature showed the failure of many manufacturing organizations was due to poor profit maximization emanating from lack of adequate liquidity to initiate viable investments. The issue of low liquidity has been traced to weak credit management resulting in a poor receivable collection when due and bad debt losses. This study evaluated the impact of credit management strategies on the liquidity and profitabilityof quoted chemical & paints manufacturing companies in Nigeria. The descriptive survey research design was implemented. 500 staff representing 60% of the population was used as the sample population upon which copies of questionnaire were administered. 342 valid responses were returned by the participants and analyzed. One-way ANOVA was used for descriptive statistics, and a simple regression analysis method was  used to test the formulated hypotheses. The result obtained indicated that the credit management strategiessub-variables - credit risk assessment, debt recovery strategy, receivable collection policy, have positive and statistically significant impact on the liquidity sub-variable - Ability to pay, level of bad debt, and cash inflow (R=.654 R2=.632, p=.0<.05; R=.692, R2=.674, p=.0< .05; R=.621, R2=.601, p=.0<.05). The effect of liquidity on profitability was positive and statistically significant (R=.723, R2=.701, p=.0<.05). The study recommended that organizations within the industry should improve liquidity to achieve the desired profit level by (i) having effective credit terms and proper risk assessment strategy, (ii) designed and implemented debt recovery plans to aid collection of the overdue debt, (iii) adopt a stringent credit collection method, and (iv) employ and retained qualified Accountants and Credit Administrators with excellent knowledge of credit control methodology.  


Credit sales, Accounts receivables, Credit management strategies, Liquidity and profitability, Manufacturing industry

Full Text:



  • There are currently no refbacks.