International Journal of Management and Commerce Innovations ISSN 2348-7585 (Online) Vol. 7, Issue 2, pp: (219-225), Month: October 2019 - March 2020, Available at: www.researchpublish.com
EFFECTS OF ACCOUNTS RECEIVABLES IN PRINTING INDUSTRIES IN KENYA 1 1
JAMES NYAMU NYAGA, 2Dr. AGNES NJERU
Student of PhD Business Administration (Finance) in the school of Entrepreneurship, Procurement and Management of Jomo Kenyatta University of Agriculture and Technology, Kenya,
2
Lecturer in the school of Entrepreneurship, Procurement and Management of Jomo Kenyatta University of Agriculture and Technology, Kenya,
Abstract: Accounts receivable constitute a significant portion of current assets in industrial firms. Management therefore have to formulate strategies of effectively managing this important yet sensitive asset. This study was to investigating Effects of Accounts receivables in printing Industries in Kenya the scope been Nairobi Industrial area. The study further wants to determined how internal controls affect Accounts receivables in printing Industries at Nairobi Industrial Area A sample of 50 respondents was selected using stratified random sampling in each of the printing industries there were five strata. The strata were that of key management staff, chief finance officer, finance staff, head of delivery and credit control staff where information was collected using semi structured questionnaire administered to the five respondents in the selected firms to collect both qualitative and quantitative information. Where necessary, personal interviews and documentary analysis ware conducted to enhance validity of information gathered using questionnaires. Data was analysed using descriptive statistics where measures of central tendency and measures of dispersion were computed to give results. Charts, tables and graphs were used to report findings. The study findings that internal controls procedures that had been approved by management in the management of accounts receivables. The study concluded that strong internal controls measures in accounts receivables need to have a strong management strategy and employees in place. Keywords: Accounts receivable, printing Industries, industrial firms.
1. BACKGROUND OF THE STUDY According to (Miller, 2008), there are at least four reasons why an organization should have a written credit policy, and they each add to the productivity of the entire organization. Therefore the efficient liquidity management involves planning and controlling current assets and current liabilities in such a manner that eliminates the risk of the inability to meet due short-term obligations, on one hand, and avoids excessive investment in these assets, on the other. This is due in part to the reduction of the probability of running out of cash in the presence of liquid assets. However the ultimate measure of the efficiency of liquidity planning and control is the effect it has on profits and shareholders’ value. The working capital approach to liquidity management has long been the prominent technique used to plan and control liquidity. To measure liquidity, Farris & Hutchison (2002) posited that corporate liquidity is examined from two distinct dimensions, the static or dynamic views. The static view is based on commonly used traditional ratios, such as current ratio and quick ratio, calculated from the balance sheet amounts.
2. STATEMENT OF THE PROBLEM There is a direct relationship between a firm’s growth and its working capital needs. As sales grow, the firm needs to invest more in inventories and debtors. The finance manager should determine levels and composition of current assets, namely, Inventory, Receivables, Cash, and Marketable securities, which will help to run the business smoothly. Account receivables are one of the major components of working capital. The receivables are a result of credit sales which helps to increase the profits. At the same time, credit sales result in blockage of funds in accounts receivable and an increased chance of bad debts. In order to minimise the bad debts, it needs careful analysis and proper management.
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