Management of accounts receivable and financial performance of manufacturing firms listed in Nairobi stock exchange, Kenya

Abstract

Management of receivables is a key aspect of working capital management. This paper seeks to establishthe relationship between management of accounts receivable on financial performance of manufacturing firms listed in NSE. The study used descriptive research design where data was collected in order to establish the current status of the population. The population of the study comprised of 147 finance and accounts staff of all the manufacturing firms listed in NSE for period of Six (6) months from April to October 2016. Data was collected by use of selfadministered questionnaires and analyzed using both descriptive and inferential data analysis. Study established that there was significant relationship between Credit extension policies, further it established that financing receivables has significant effect on the financial performance and receivable collection period has significant effect on the financial performance of the firm.The results of the study showed a value of R2=0.889(p=0.01) this means that independent variables collectively account for 88.9% of the depended variable. The study established that there was significant relationship between accounts receivable management and financial performance of manufacturing firm. The study recommends that the management of the manufacturing firms should have clear policies on management of accounts receivables, that is, credit extension policy, financing receivable and receivable collection period since it significantly affected their financial performance of the firms.