The effectiveness of credit policy management and its contribution to the performance of the firm (a case study of Kisakye pharmaceutical company limited)

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Kampala International University, College of Economics and Management
This research focused on the effectiveness of Credit Management Policy and its contribution to the performance of the Firm. The research was carried out at Kisakye Pharmaceutical Company Limited. The objectives of the study were: to evaluate the effectiveness of the credit management policies of Kisakye Pharmaceutical Industry Limited, to establish the credit management policies implemented by Kisakye Pharmaceutical Company Limited, to establish the effect of credit management policy on the financial performance of the firm. The study employed both a case study and a descriptive design based on the results from questionnaires, interviews and observation with a sample of 55 respondents. The data was from primary and secondary sources. The company established effort as a measure of administering credit sales and accounts receivables. Those policies had objectives of gaining a competitive edge, maximising sales and cash inflows. The research therefore showed that there is a strong consideration of customers' length of time dealing in pharmaceutical products before extending credit to him/her. The research also indicated that the credit policies implemented by the company were effective with 60% response and had a direct impact on the performance of the firm. Nevertheless, the study identified major weaknesses in Kisakye's credit policy systems which include: Lack of access to credit applicants' bank accounts and their dealings with the bank, it does not get security against credit granted. It also has a weakness in its collection efforts, for instance they do not exploit legal means. In view of the above, recommendations were proposed on how to moderate the credit policy in respect of stimulating the effectiveness of credit management policy and its contribution to the performance of Kisakye Pharmaceutical Company Limited.
A Research Report Submitted to Kampala International University in Partial Fulfillment of the Requirements for the Award of Bachelors Degree of Business Administration of Kampala International University
Credit policy management, Firm, Kisakye Pharmaceutical Company Limited