Trade credit management and SMEs sustainability: a study of selected SMEs in Lagos, Nigeria

Trade credit management and SMEs sustainability: a study of selected SMEs in Lagos, Nigeria

Many businesses, especially SMEs are being made to offer credit facilities to customers in a bid to encourage patronage. The mismanagement of this trade credit however can lead to a devastating plunge in the financial performance of the business. This study explores the relationship between trade cr...

Full description

Saved in:
Bibliographic Details
Published in:International journal of system assurance engineering and management Vol. 13; no. 4; pp. 1834 - 1844
Main Authors: Peter, Fred Ojochide, Peter, Adeshola Oluwaseyi, Bamidele, Rasak, Adeniyi, Mubo M., Adama, Ibrahim, Decster, Lydia Harry, Ogundipe, Esther, Adioti, Bunmi S.
Format: Journal Article
Language:English
Published: New Delhi Springer India 01-08-2022
Springer Nature B.V
Subjects:
Credit management
Credit policy
Data analysis
Data collection
Descriptive research
Engineering
Engineering Economics
Financial management
Hypotheses
Logistics
Marketing
Organization
Original Article
Qualitative analysis
Quality Control
Questionnaires
Reliability
Return on investment
Safety and Risk
Small & medium sized enterprises-SME
Small business
Nigeria
Trade credit
Extensive credit checking
Performance
Cash discount
Sustainability
SMEs
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Many businesses, especially SMEs are being made to offer credit facilities to customers in a bid to encourage patronage. The mismanagement of this trade credit however can lead to a devastating plunge in the financial performance of the business. This study explores the relationship between trade credit management and financial performance of small and medium enterprises in Lagos state Nigeria, using the descriptive research design. The research adopted a mixed-method approach using a structured questionnaire and a semi-structured interview as instruments for data collection. A total number of 285 copies of the questionnaire were distributed to business owners engaged in sales and services in Alimosho and Ifako Ijaiye LGA in Lagos State, Nigeria, while a semi-structured interview was conducted on fifteen (15) business owners in the selected locations to augment data collected via the quantitative method. Data analysis was carried out using linear and multiple regression while the qualitative data were analyzed and interpreted using the thematic analysis. The results from the test of hypotheses showed that cash discount, extensive credit checking, and credit policy significantly impact financial performance. Results from the thematic analysis validated the findings from the test of hypotheses. The findings of the qualitative analysis revealed that the effective management of trade credit will improve the financial performance of SMEs. Premised on these findings, this research recommended that techniques like cash discount, extensive credit checking, and credit policy be used to drive an increasing return on investment for small businesses.
ISSN:0975-6809
0976-4348
DOI:10.1007/s13198-021-01569-y