An Assessment of Debtors Management Practices amongst Large and Medium Sized Firms: A Case of Machakos Town in Kenya

Abstract

The study did an assessment of debtors management practices amongst large and medium firms, a case of Machakos town in Kenya. The study sought to find out the debtor management practices used by the firms; to identify challenges facing debtor management practices by the firms; and to identify policies employed to counter challenges facing debtor management in Machakos Town. Stratified sampling was used to select a sample for the study where analysis was done using descriptive statistics and percentages and data presented in tables and graphs. One key finding was that these firms did not have established procedures for overdue account. However, the study found out that these firms used the 5cs of credit when evaluating the creditworthiness of a buyer. It was thus concluded that debtors management practices amongst these firms were limited, though a significant number of firms often grant credit to their customers which can be attributed to lack of financial management skills. It was hence recommended that these firms should employ more qualified staff to enable them keep track of debtors’ accounts in a more informed manner and only warrant credit on a case by case basis to avoid a higher risk of non-repayment.