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It is axiomatic that all private sector participation in business, whether in small medium or large scale aim at optimal and prudent utilization of her limited resources to minimal cost as well as maximize her profit. Profit-oriented business are not government own and as such management policies and programmes differs. For instance credit management policy in the private business may not be the same in the public sector. Power Holding Company of Nigeria is privatized company that regulate the supply and use of electricity in Nigeria. By the concept of privatization, government control the management of the company by 40% while 60% goes to the private sector. In other words, the power Holding Company under the principal of privatization is to manage the assets and liabilities of the company a profit-oriented company. The capacity of the company to make profit, greatly depends on the management of this credit policies science consumers buy now and pay later, while some through the electronic consumption mechanism pay as they consume. This project research intends to investigate power know the credit management policies of power Holding company and how effective and efficient they are in profit making. The research study also endeavours to identify the problems of militating against proper functioning of the company and tentatively proffer solutions where necessary. The research question, hypothesis and other methodology to guide in the course f this work are discussed in the subsequent chapters.



Basically, profit-oriented organizations in the (business world, globe) must endeavor to minimize cost and maximize her profit through effective and efficient management policies and programs. No doubt, the going-concern of any business organization greatly depends on the execution of her management policies and programs, which have a direct influence on the existence of the business.

        For instance, the organization’s credit management policies to offer her product or services before payment and receiving immediate or prompt  increase debtors accounts as products are offered on credit and may also enhance the cash and/or capital position of the organization. Policies on sourcing for founds, policies or raw materials or stock management and human resource management, can equally make or mar the progress of a business enterprise.

        Among these policies credit management policies seem to be pivotal in the running of business, since credit has a direct influence on the operating cycle of the organization, customers, sales volume, profit and stock management. Cash flow is the life blood of every business and should be protected as a priority. A good credit management policy will include a strategy for credit checking customers, a well-planned collection process and a system for dealing with queried invoices. Ineffective credit management strategies can make an organization to operates at a colossal loss and can create room for accumulation of debts.

        It is therefore axiomatic that any business outfit, whether it is government the private sector, large or small scale cannot survive if sound and effective credit management policies are not put in place. That is why credit management sometime becomes the centre point in profit-oriented organizations.

It must be noted that if the value of credit sales is higher than cash sales, the current asset, which include cash or capital base of the business may be negatively affected. And if it is a zero credit tolerance, the number of customers would decrease and when this happen, stocks become more unproductive and sales volume decreases too. Also inefficient debts collection period or strategies can make or mar the progress of the business. According to Van Horme (2004), “the firm’s credit policies are the chief influencers on the local of a firm’s account receivable:.

The power Holding Company of Nigeria PLC, has “electricity” as her product or services. It is believed to be non-profit organization, a government own company with the aims of supplying essential services to the citizenry. In the recent past, the concept of privatization has made it a joint ownership and management Venture, whereby 60% private sector participation in management, has made it profit-oriented. Credit management is a serious bottleneck in the power holding Company of Nigeria Plc,

        This research study therefore is to investigate to know the credit management problems of profit oriented organization, to known how effective the debts collection strategies of the profit-oriented organization are working taking power Holding company of Nigeria Plc into consideration.


        For the purpose of researching to know the credit management problems in profit oriented organization, the study work is divided into five chapters for a sense of direction, appreciation and clarification.

        Chapter one takes care of the introduction which introduces the subject matter of the research topic, “credit management problems in profit oriented organization”. It also discusses the statement of problem which calls for the study, the purpose of the research study and followed by research questions and hypotheses. This chapter also treats the significance of the study, limitation of the research work, and then attempts to define some terms for more clarification and purposefulness.

        Chapter two of this research study reviews related literatures of some eminent and time-tested scholars whose academic deficiencies, and worthy or referencing. The review of these literatures range from the  historical background of power holding company of Nigeria, Plc, the meaning of the word “credit” and its forms, the relationship between credit and the concept of management in profit oriented organization the meaning of credit managements and the importance of credit in the operation of an organizations.

This chapter also discusses the problems of credit management and it effects in the life of the business, and credit collection policy by the PHC.

Chapter three embodies the research design and methodology, the area or scope of study, method of data collection and analysis techniques, the sample size and instrumentation, while chapter four takes care of the presentation of data and analysis where by tables, percentages and chi-square methods would be deployed to test the result of findings. Chapter five summarizes, concludes and offer recommendation where necessary.    


Every profit-oriented organization in the environment is plagued with one problem or the other. It could be administrative, management or lack of proper implementation of management policies. It is undoubtedly factual that lack of credit policies management has been one of the reasons why some businesses are not progressing. For instance, the ways in which credit policies are implemented. Giving a longer period to debtors to settled their bills or offer some payment discount without appropriate measures or strategies of debt recovery and management is enough problem. Some businesses lack the administrative competencies to control debts collection and to institute the required procedures for controlling credit to corporate and individual customers. With particular reference to the power Holding Company of Nigeria Plc, the researcher intends to investigate to know most of the credit management problems and tentatively proffer remedial suggestions.


        There is no venture without a purpose.

As such, the purpose of this study is to investigate to know the credit management problems of profit-oriented organizations, using power Holding Company of Nigeria Plc as the case study. Identify the debt collection strategies of the company; identify the administrative competencies, and the credit management policies of the company.


        For the above objectives to be accomplished, the researcher has formulated the following questions to aid in the course of this study.

1)  Are the credit management policies of the power Holding company significant to profit making?

2)  Are the company’s debts collection strategies effective for profit making?

3)  Are the administrative competencies of the company strong enough to improve the profit based of the company?

4)  Privatization and commercialization, which one can improve the profit-base of the company?


        The research hypotheses are stated in a null form such that the positive one could be adopted as the result of the findings of this work.

1.  There is no significant relationship, between effective credit polices and profit making

2.  There is no significant relationship between debt collection method and the profit of the company.

3.  There is no significant relationship between the administrative competencies and debt collection strategies of the company.


        The following would be the benefit of the study.

1.  On the successful completion of this study, it would make useful contribution toward improving debt recovery techniques that would improve in the revenue base on the company.

2.  The study would assist the organization to post bills to customers as early as possible.

3.  This study is believed to be useful to managers and potentials managers of companies on the need for effective and efficient credit management policies.

4.  It also serves as a reference point in future research studies.


        The scope of the study was the principal services centre of Akwa Ibom territory of the power Holding Company where over 60% of the state electricity services are concentrated. Specific areas covered were staff of the finance and account departments. The research would also restrict itself to the amount of information which the staff of the company would be willing to give. The study was constraints by number of factors namely:

1.  Financial constraints of the researcher being a student

2.  Short period of time that this project was required to be completed.


        The following assumptions were made:-

1.  That the respondents of the study would cooperate with the researcher by giving prompt and correct answers to the research questions.

2.  That the respondents will be willing to supply needed information when he or she is approached.

3.  That up to 80% of the research question sent out would be returned to the researcher to justify the conducting of the study.     


What is credit? Credit is the ability to obtain goods or services before payment based on the trust that payment would be made in the future. (Merriam Webster, 1975).

Management: Is the process by which the common objectives of an organization or a group is achieved through co-operative efforts and actions of people utilizing resources (Benjamin Inyang, 2004:2). It is the act of getting things done through other people.

What is Credit Management? Credit management means the professional management of what is frequently described as the longest current assets in a company’s balance sheet. It also means the planning, organizing, directing and controlling of all credit activities of an organization, utilizing human and non-human resources effectively and efficiently with a view to accomplishing the objective for which credit were granted. (Lecture not 2012).

Disconnection for Non-Payment? Electricity service may be placed on disconnection for non-payment as a result of the indebtedness of the consumers to the organization. (public interview, 2013).

Service centre? This means the town where small electricity office is located to enable workers render services to the consumers around, that particular environment. (Interview of 7/8/2013).

Disconnection: This means to withdraw the service wire that provides services to a consumer due to his indebtedness to the company or for other technical reasons (may be) deemed necessary by the company.

Debt: Something owed to another or obligation or the condition of owing indebtedness (New oxford learner’s Dictionary 1981).

Debt Collection: This means turning in the receivable into cash through the application of some measures.

Account Receivable: This means the credit sales to be collected. All credit transaction due for collection.

Creditors: This means that the company or individual who sells goods or services to customers without receiving cash immediately. In other words, a creditor is one who is being owed.

Debtors: This means individual who buys goods or services from a seller without paying cash immediately but would pay at the later time.

Assets: This means all that the company has as its own property. It could be fixed or current assets.

Liabilities: These are the property that belong to the public, but the company is indebted to the public. Put differently liabilities are obligations due to outsiders of a business. In event of liquidation the liabilities are settled according to the number or amount of share contributed, if is a limited liability company which is limited by shares.

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