Recently with the present economic predicaments in the country, many business organization and individuals have found it difficult to cope with the high cost of living. This is due to the paucity of the cash available in the economy with which they can buy the necessary goods and services they required on the spot with cash. 

Fortunately, with the advancement in the business world sales and purchase can be made on credit basis thus alleviating the sufferings and deprivation, that would have been experienced by individuals, business enterprises and various governments while making business transactions. 

The research topic delves into trying to ascertain the management of accounts receivable and its impact on the performance of business organization in Nigeria, but with particular attentions to Enugu Home Ownership Company Limited Enugu.

In chapter one, a general background statement about the topic was given. The state of the problems of the study was mentioned, it also states the hypothesis for the study. 

In chapter two, Review of related literature as regards to account receivable impact on the performance of business organization under this chapter, the definition of accounts receivables as were given by related literature and the formulation of accounts receivable policy, the determinants of accounts receivable policy as the measure of promoting accounts receivable were all examined from related literature.  

In chapter three, attempt was made to show the various methods used in gathering the necessary data for the studies e.g. Research design, area of study, population of study, sample and sampling procedure and others in the table of content and the problems encountered in data collection. 

In chapter four dealt with analysis of findings based on the date collected, it evaluates and disuses the findings. The hypothesis set in chapter one was tested also. 

Likewise ascertain effectiveness or ineffectiveness of the company in caring on the business. 

Finally in chapter five, takes care of the summary of the findings and conclusions likewise making the necessary recommendation. 


Title page 






1.0 Introduction 

1.1 Background of the study 

1.2 Statement of the problems

1.3 Purpose of the study 

1.4 Significance of the study 

1.5 Scope/Delimitation of the study 

1.6 Research questions

1.7 Hypothesis

1.8 Definition of terms 


Review of related literature 

2.1 Introduction

2.2 Formation of accounts receivable policies 

2.3 Determinants of accounts receivable policy 

2.4 Measure of promote account receivable 

2.5 Historical background of Enugu Ownership company limited 

2.6 The role of accounts receivable I achieving the firms goal 

2.7 Accounts receivable policy and its implementation


3.0 Methodology   

3.1 Research Design 

3.2 Area of the study 

3.3 Population of the study 

3.4 Sample and sampling procedure 

3.5 Instrument 

3.6 Variability of the Research Instrument 

3.7 Reliability of the research instrument 

3.8 Method of administration of the research instrument 

3.9 Method of data analysis 


4.0 Data presentation and analysis of results 


5.0 Discussion, Recommendation and Implication 

5.1 Summary of findings

5.2 Conclusion 

5.3 Implication of the result  

5.4 Recommendation

5.5 Suggestion for further research 

5.6 Limitation of the study 




Appendix I 

Appendix II



Going by the advent of time, civilization, economic conditions, and business world, the world had known only a cash or barter economy. However, with development in business world, business is being transacted on credit basis.

In recent years, many business organization in Nigeria have experienced liquidity problems largely because of the effects of high rate of inflation. This has been necessitated by he various economic measures in 1982 to the structural adjustment programme (SAP). In 1991 and the present economic crisis inspired by the 419 syndrome. Because of this, if they becomes more imperative than ever to get money promptly from the debtors for the day today operations because of;

-              The uncertainty in the fluctuations of prices:

-              The subjective preference for present consumption over future consumption; and

-              The need to take advantage of the available investment opportunities.

However, if all these transactions were to be made on cash basis, various firms in terms of sales turnover.

Consumers and middlemen could equally be affected of all purchases made from companies are always on cash basis. Truly individuals or firms have preference for possession of a given amount of cash now, rather than having the same among some time in the future-time preference for many.

Yet, money (cash) is a scarce commodity which has wide range of application in the area of both human and material needs. Thus, this brings about the problem of effective management of the available cash resources through efficient receivable collection management.

Receivable represent claims, usually stated in definite financial terms, arising from the sale of goods, performance of services lending of money or other type of transaction which establishes a relationship whereby one party is indebted to another in an agreed term.

This column which result from the sale of goods or services or property and which may or may not be supported by a written note but which are not secured by specific collaterals right of specific claims or the assets of the debtor should the debtor fail to pay, are categorized as accounts receivables. 

Accounts receivables are sometimes of short term nature which can be defined as claims held against other for money, goods or services which are collectible within a year or an operating cycle, which ever is longer.

For financial statement purpose, receivable could be classified into sections.

Receivable clarrificable as trade and receivable clarrificable as Non trader

 Trade receivables are amount of owed by customers for goods sold as part of the normal operation by business. They are usually a written commitment of other and are normally collectible within one years and sometimes as long as five years 95 years). Neither non-trade nor special receivable which arise from a variety of transactions are written promises to pay at a later date. Example of non-trade receivables are advance to officer, advance to subsidiaries and deposits to cover potential damages or loses etc.

A firm grants credit in order to protect its sales from competitions and to attract the potential customers to its goods and services at favourable terms and to cultivate an atmosphere of mutual relationship between itself and its customers. Trade credit creates accounts receivables or what is called book debts, which the firm is expected to retrieve in the forceable future.

These book debts or accounts receivables arising out of granting credit facilities have three major elements.


This might result in bad debt to the sellers. Cash sales are without risk out not credit sales as cash is yet to be received.


This is another element associated in granting credit in that account receivable is based on economic value. To the buyer of goods and services, economic value passes immediately at the time of sale be. There is change of ownership while the seller accepts an equivalent value to be received at a later late. 

3)      Futurity

This means that payment will be made in the future. The customers from whom receivable have to be collected in future are called trade debtors or receivables which represent forms claim on assets.

In view of these characteristics the adoption of an efficient accounts receivable policy becomes necessary towards achieving the overall organizational goals or objectives.


Many business organization make their sales on credit which may prove unable to collect as and when due. This causes a great problem, on the performance of the organization especially as a going concern. However, the sales department will always want to increase the sales turnover, hence the need to increase credit sales to customer. The credit department being the conservative partner will always rely wholly on collectibles of these debts. What occupies the department most is whether such credit exerted, with definitely materialize by debtors, paying their debts. If the debts resulting from credits are not collected then due, which department should bear the bunt? Is it the accounts department or the sales department which requested for its approval? The functional problem is heightened as the following expression indicates.

Our aim is to spell out in no uncertain terms the two-edged nature of the credit sword, viz.

“Protection and promotion”. The problem thus becomes that of protecting the company’s investment is receivable which is responsibility of the credit department, and that of promotion of profitability which is directly them main pre-occupation of the sales department.

In Nigeria, accounts receivables constitute a substantial portion of current assets of several companies granting credit customers tantamount to temporarily deprivation of the user of the company’s funds. Thus the effect of allowing to take time to pay their debts is equivalent to investing in the debtors concerned. However, according to the reliability on these customers, the investment on them will take on greater or lesser degree of risk while at the same time there is effectively locked up amount of capital which the company might use profitability for other purpose. Subsequently, this mighty force the company to seek funds internally for its business operation.

Infact, the management of accounts receivable is saddled with timing problems. When a company (ie the creditors). Extends credit to its customers, it is not possible to say with certainty whether the credit will be paid on forms agreed upon.

The company is bound to face a certain degree of credit risk. In the required trade off between risk and profitability enough to composite the company for taking such a risk? If the risk sufficiently good enough to be accepted by all departments? Theses and others are the problems that require attention in the company.

As an efficient management of accounts receivable is necessary for the overall performance of an organization, it is pertinent that in extending credit, the credit department should analyze critically the “five C” “S” of credit for any perfective debtors.

1.3            PURPOSE OF THE STUDY

In every business organization, accounts receivable plays an important role in assisting the business attain its profitability objectives, particularly in those areas that relate to the profits and returns on assets investment.

The basic purpose of this study is to:

a)                 Try to attempt how the company can optimize liquidity position by adequate credit policies, practices and procedures regarding credit granting, credit limits and collection of receivables without risking assets through an excessive amount being field up in accounts receivables.

b)                Examine and check the amount of receivables that can be rightly classified as receivables which will definitely materialize in payment.

c)                 Stress the need for co-operations with other credit departments through regular exchange of information. The credit department should also liaise with other departments within the business organization which may be in position to give information relating to effective accounts receivables management.

d)                Assessing the profitability of maximizing or optimizing sales or business volume through the use of trade debtors.

e)                 Relate how effective accounts receivable management can assist business to attain its predetermined profitability by increasing net returns on asset investment.

f)                  Determine whether inefficient accounts receivable management had led for the winding up of offices in debt collection during the past three years.


In the recent time, the entire business world is witnessing some changes and so, greater emphasis being placed on credit management.

While industrial out-put are growing, we should expect receivables to increase as well, which to some extent is forced by highly competitive conditions. This therefore suggests that perhaps, credit, being used as an instrument by the sales department to generate more sales volume. If a firm embarks on a too high credit policy, there will be tendency for possible loss of some customers and so loss of sales to other competitions; while on the other hand, it will possibly face high risk of bad debts if she allows for any easy or porous credit policy.

Therefore, since non of two extent favour, the company of this study will be to help strike a balance between the two in order for the company to be able to achieve its desired objectives. The study will also highlight on the possible consequences of not having or operating on efficient accounts receivable management in business organization. The research work will also expose management of business organization to the effective way of managing accounts receivables towards the achievement of the organizational goals. And now business organization will tackle various risk inherent in credit sales but the most essential aspect is the control function which aims at checking and bringing any defaulter desired objectives of efficient receivable management.


The study is to analyze the management of accounts receivables and its impact on performance of business organization in Nigeria, with particular reference to Enugu Home Ownership Company Limited. This is with the view to determine how the company has been able to manage her accounts receivables towards achieving her objectives.

In the analysis, attentions will be focused on the investment in trade from the stand point of granting company. Study covers ascertaining from the company’s accounts or cr3dit department, all necessary information and other requirements that would help the company in achieving its objectives by granting credit or where there are short falls. What factors that attributed to that are all among the areas to be covered under study.

1.6            DEFINITION OF TERMS

To avoid loss of value of this research through misinterpretation of words, effort was made by the researcher to allow for common understanding of terms used in the research works. 

The research however is not completely without some essential terms, and abbreviations such as:

FLUCTUATION: It is he movement (moving up and done) of prices of goods and services. The prices of goods are not steady.

INVESTMENT OPPORTUNITY: the favourable time or chance of put your money into business.

ACCOUNT RECEIVABLES: Something used as pledge for repayment of a igan .

RISK: The possibility of meeting damager.

PROFITABILITY: They benefits that come out from investment or business. The 5C’S: The factors to consider before granting credit to customers, they are capital, capacity, collateral, character and condition




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