EFFECT OF CREDIT APPROVAL PROCESS ON ACCOUNT RECEIVABLES IN KENYA LITERATURE BUREAU (KLB)
Abstract
Purpose of the study: Over the years the Kenya Literature Bureau (KLB) has experienced continued increase in uncollectible debts. This has forced KLB to write off huge debts every end year thus leaving very little or no surplus for expansion or improvement of her facility. In year 2007 and 2008 alone, KLB wrote off Kshs 125 million as uncollectible debts while in 2010/2011 financial year, KLB wrote off a total of Kshs 80 million as uncollectable debts. The purpose of this study was to determine the effect of credit approval process on Account Receivables in KLB.
Methodology: The research design was descriptive in nature and employed the survey method. Purposive sampling technique was adopted and a sample size of 90 employees of Kenya Literature Bureau was selected to participate in the case study by completing the questionnaire. Data collected was analyzed through cross tabulation of data variables coded on the study’s questionnaire responses using SPSS computer package.
Results of the study: The study revealed that credit approval process plays an important role toward proper management of accounts receivables in KLB.
Conclusion and policy recommendation: The study recommends that Credit Approval Policies be reviewed regularly to ensure that approval levels are as dynamic as the business world is. To be relevant and worthwhile, a credit approval policy must be current, not out of date. A written policy can be reviewed by senior management and either accepted or modified helping ensure that the credit department focuses on what the company considers vital.
Keywords: Credit approval process, Account Receivables and Kenya Literature Bureau
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