An Exploratory Study on Trade Credit Management and Firm’s Profitability

Babajimi-Joseph, Adekemi Victoria and Ogunnaike, O.O. and Kehinde, O.J. and Perez, Ayorinde (2023) An Exploratory Study on Trade Credit Management and Firm’s Profitability. Innovations, 74. pp. 104-127.

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Abstract

Small and Medium Enterprises play a vital role in the growth of an economy by providing employment, contributing to GDP, and promoting entrepreneurship and innovation. Trade credit, in the form of extended payment terms offered by suppliers, can help SMEs access necessary goods and services to run their operations, improve cash flow, and increase profitability. However, there is currently a dearth of empirical research on the connection between Trade credit and SMEs' profitability, highlighting the need for more research in this field. The purpose of the study is to analyze the approach taken by SME businesses to managing their customer receivables and to look into the connection between Trade credit and business profitability. Secondary data from Scopus was reviewed and findings show that trade credit can positively impact the organization's profitability, but poor management can result in decreased profitability. Credit management technique that balances liquidity and profitability is needed for high-level account receivables management.

Item Type:	Article
Uncontrolled Keywords:	credit management, trade credit, SMEs, performance, profitability, credit management strategies.
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions:	Faculty of Law, Arts and Social Sciences > School of Management Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User:	Patricia Nwokealisi
Date Deposited:	19 Apr 2024 14:29
Last Modified:	19 Apr 2024 14:29
URI:	http://eprints.covenantuniversity.edu.ng/id/eprint/17922

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