International Journal of Research and Innovation in Social Science (IJRISS) | Volume VI, Issue IV, April 2022 | ISSN 2454–6186

Management of Account Receivable and Payable for Improved Financial Performance of Small Scale Industries in Imo State, Nigeria

Honesta C. Anorue, & Ernest .O. Ugwoke
Department of Business Education, University of Nigeria, Nsukka

Corresponding Author: Ernest .O. Ugwoke

Abstract
The study was conducted to determine management of account receivable and payable for improved financial performance of small enterprises in Imo state. The study used a survey research design, with 1390 participants, including 70 Accounting lecturers, 1,300 small scale enterprises operators and 20 professional accountants. The study used a multistage sampling procedure to draw a sample size of 396 participants. To answer the research questions, the collected data were analyzed using mean and standard deviation while the ANOVA statistic was used to test the two null hypotheses at the 0.05 level of significance. In particular, the research identified effective ways for managing account payable and receivable of small scale enterprises for financial performance in Imo state. Based on the research findings, it was proposed, among other things, that a retraining initiative for the owners or potential owners of small scale enterprises in the state be established to educate them on the effective ways to manage accounts payable and receivable for efficient financial performance and business success.
Key words: Small Scale Enterprise, Management, Account Receivable, Account payable, Financial Performance, Trade credit

1. Introduction
Small businesses are widely recognized as an essential catalyst for global economic growth.
Because they are primarily owned by one entrepreneur, small scale enterprises are not full-size in terms of dimension, range of operation, financial involvement, or labour force (Obi, 2015). An industry that has a criteria of project of cost, capital, and number of employees, sales volume, annual business turnover and the financial strength (Ayozie, Jacob, Umuokoro and Ayozie, 2013). This implies that small scale enterprise is an establishment privately owned solely by an individual or as a partnership with a small number of employees. Since the majority of small businesses are sole traders or partnering, they typically have a low capital base (Oboro & Ighoroje, 2011). The authors also contended that small businesses have little or no access to capital markets, whereas large corporations do. As a result, the only alternative is to obtain credit from microfinance institutions, friends and family, and individuals, often on acceptable terms. Small-scale operators largely depend on “liable capital,” bank loan, trade deficit, and leasing to fund their operations (Oboro et.al, 2011). Nevertheless, in the last few years, small businesses in Nigeria were given guiding principles, awareness and monetary benefits. In addition, the failure rates of small business owners are much higher than those of large businesses (Mehralizadeh & Sajady, 2005). The ability of a firm to orchestrate finances when developing a cash flow administration tactic is critical to a firm’s financial performance (Mbula, Memba & Njeru, 2016). Increasing accounts receivable and/or extending repayment schedule is two of the most common ways to enhance sales and grow a business (Kharabadze & Jikia, 2018). Small scale enterprises are being granted credits facilities by their suppliers and by extension to their own customers. But, small-scale businesses that frequently sell on credit, with late payments occurring almost on a daily basis, will undoubtedly harm the company’s cash flow. If the credit terms can be extended to include payment terms, the cash flow will improve.