THE IMPACT OF CREDIT MANAGEMENT ON THE PROFITABILITY OF A MANUFACTURING FIRM (A CASE STUDY OF UNILEVER PLC ABA, NIGERIA).

THE IMPACT OF CREDIT MANAGEMENT ON THE PROFITABILITY OF A MANUFACTURING FIRM (A CASE STUDY OF UNILEVER PLC ABA, NIGERIA).

  • The Complete Research Material is averagely 52 pages long and it is in Ms Word Format, it has 1-5 Chapters.
  • Major Attributes are Abstract, All Chapters, Figures, Appendix, References.
  • Study Level: BTech, BSc, BEng, BA, HND, ND or NCE.
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                                        ABSTRACT


The aim of this research work is to appraise “The impact of credit management

on the profitability of a manufacturing firm focused on Unilever Nigeria Plc Aba”.

This  is  because;  trade  credit  is  a  short  term  source  of  finance  and  sometimes

take  the  form  of  bills  payable.  The  statement  problem  of  this  research  banks

about  the  poor  level  of  credit  management  and  also  the  problems  which  the

firms  encounter  as  a  result  of  high-rate  of  bad  debts.  The  objective  of  this

research  study  is  to  highlight  the  effects  of  the  credit  management  on  the

profitability  of  the  company  as  well  as  to  highlight  the  advantages  of  effective

and  efficient  management  of  trade  credit  amongst  others.  Furthermore,  this

research  work  will  be  of  immense  significance  to  the  staff  of  Unilever  Nig.  Plc

Aba as well as the students and the researcher since it aims at providing effective

means of reducing default in collection of accounts. Also, research questions like;

could a company’s liquidity problem be attributed to bad debt? On the average,

how long do you allow credit to customers? Etc. research instrument used were

questionnaires  for  the  purpose  of  obtaining  the  desired  result.  In  treating  and

analyzing  the  data  collected,  an  extensive  use  of  tabular  information  and

percentages  were  of  great  importance.  In  the  light  of  the  findings  and

conclusions  of  this work,  the  following  recommendations  are  put  up:  that then

should be a regular review of credit policies to suit the changes in the business

environment  and  that  an  enquiry  unit  should  be  established to  take

responsibility for prospective credit’s assessments amongst others. 

 



 

                                    CHAPTER ONE


1.0 INTRODUCTION


1.1 BACKGROUND OF THE STUDY


 Credit  management  is  a  term  used  to  identify  accounting  functions


usually conducted under the umbrella of accounts receivables. Essentially, this


collection  of  processes  involves  qualifying  the  extension  of  credit  to  a


customer,  monitors  the  reception  and  logging  of  payments  on  outstanding


invoices, the initiation of collection procedures, and the resolution of disputes


or  queries  regarding  charges  on  a customer  invoice.  When  functioning


efficiently,  credit  management  serves  as  an  excellent  way  for  business  to


remain financially stable. 


 Competent  credit  management  seeks  to  not  only  protect  the  vendor


from  possible  losses,  but  also  protect  the  customer  from  creating  more  debt


obligations that cannot be settled in a timely manner. 


 Several  factors  are  used  as  part  of  the  credit  management  process  to


evaluate  and  qualify  a  customer  for  the  receipt  of  some  form  of  commercial


credit.  This  may include;  gathering  data  on  the  potential customer’s,  current


financial condition including the current credit score. 


 
                                                                                          11
 

 


BRIEF HISTORY OF UNILEVER NIGERIA PLC ABA


 Unilever Nigeria Plc is a public liability company quoted on the Nigerian


stock  exchange  since  1973  with  Nigerian’s  currently  having  49  percent  of


equity holidays  established in  Nigeria. Unilever  Nigeria  Plc  started  as  a  soap


manufacturing  company  and  is  today’s  one  of  the  eldest  surviving


manufacturing  organization  in  Nigeria.  The  company  changed  its  name  to


“Unilever Nigeria Plc” in 2001.


 The  company  is  into  the  manufacture  and  marketing  of  household


toiletries  and  favorites  which  are  manufactured  in  their  various  factory


locations in Nigeria. This is because they are so deeply committed to meet the


everyday  needs  of  people  everywhere  in  Nigeria.  Such  factors  are  located  at


Lagos, Agbara, Oregun and Aba. Its staff strength is about one thousand eight


hundred  (1,800)  employers.  They also  have indirect  employees  like contract


staff and others who range from our forty thousand employees throughout the


country. 


 The company has also made provision for assistance in fields of health,


education,  children  welfare  and  potable  water  hygiene  as  part  of  its  social


responsibility programme in the Nigerian communities. 
                                                                                          12
 

 Conclusively,  Unilever  Nigeria  Plc  from  research  has  been  found  to  be


involved in both credit and cash transactions with its customers. 


1.2 STATEMENT OF THE PROBLEM 


 
There  are  many  problems  companies  encounter  as  a  result  of  poor


credit  management.  Thus,  the  problems  inherent  in  this  research  study  as


investigated are as follows:



  (1) There  is  a  high  rate  of  bad  debts  because  some  corporations  take


          advantage of the credit that is extended to them and find themselves


        not able to pay debt later. 


  (2) The  poor


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