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PROJECT TOPIC- IMPACT OF CREDIT MANAGEMENT ON THE PROFITABILITY OF A MANUFACTURING FIRM (A CASE STUDY OF UNILEVER PLC ABA, NIGERIA)

PROJECT TOPIC-  IMPACT OF CREDIT MANAGEMENT ON THE PROFITABILITY OF A MANUFACTURING FIRM (A CASE STUDY OF UNILEVER PLC ABA, NIGERIA)

ABSTRACT

The aim of this research work is to appraise “The impact of credit management on the profitability of a manufacturing firm focused on Unilever Nigeria Plc Aba”. This is because; trade credit is a short term source of finance and sometimes take the form of bills payable. The statement problem of this research banks about the poor level of credit management and also the problems which the firms encounter as a result of high-rate of bad debts. The objective of this research study is to highlight the effects of the credit management on the profitability of the company as well as to highlight the advantages of effective and efficient management of trade credit amongst others. Furthermore, this research work will be of immense significance to the staff of Unilever Nig. Plc Aba as well as the students and the researcher since it aims at providing effective means of reducing default in collection of accounts. Also, research questions like; could a company’s liquidity problem be attributed to bad debt? On the average, how long do you allow credit to customers? Etc. research instrument used were questionnaires for the purpose of obtaining the desired result. In treating and analyzing the data collected, an extensive use of tabular information and percentages were of great importance. In the light of the findings and conclusions of this work, the following recommendations are put up: that then should be a regular review of credit policies to suit the changes in the business environment and that an enquiry unit should be established to take responsibility for prospective credit’s assessments amongst others.

CHAPTER ONE
1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Credit management is a term used to identify accounting functions usually conducted under the umbrella of accounts receivables. Essentially, this collection of processes involves qualifying the extension of credit to a customer, monitors the reception and logging of payments on outstanding invoices, the initiation of collection procedures, and the resolution of disputes or queries regarding charges on a customer invoice. When functioning efficiently, credit management serves as an excellent way for business to remain financially stable.
Competent credit management seeks to not only protect the vendor from possible losses, but also protect the customer from creating more debt obligations that cannot be settled in a timely manner.
Several factors are used as part of the credit management process to evaluate and qualify a customer for the receipt of some form of commercial credit. This may include; gathering data on the potential customer’s, current financial condition including the current credit score.

PROJECT TOPIC-  IMPACT OF CREDIT MANAGEMENT ON THE PROFITABILITY OF A MANUFACTURING FIRM (A CASE STUDY OF UNILEVER PLC ABA, NIGERIA)

BRIEF HISTORY OF UNILEVER NIGERIA PLC ABA

Unilever Nigeria Plc is a public liability company quoted on the Nigerian stock exchange since 1973 with Nigerian’s currently having 49 percent of equity holidays established in Nigeria. Unilever Nigeria Plc started as a soap manufacturing company and is today’s one of the eldest surviving manufacturing organization in Nigeria. The company changed its name to “Unilever Nigeria Plc” in 2001.
The company is into the manufacture and marketing of household toiletries and favorites which are manufactured in their various factory locations in Nigeria. This is because they are so deeply committed to meet the everyday needs of people everywhere in Nigeria. Such factors are located at Lagos, Agbara, Oregun and Aba. Its staff strength is about one thousand eight hundred (1,800) employers. They also have indirect employees like contract staff and others who range from our forty thousand employees throughout the country.
The company has also made provision for assistance in fields of health, education, children welfare and potable water hygiene as part of its social responsibility programme in the Nigerian communities.
Conclusively, Unilever Nigeria Plc from research has been found to be involved in both credit and cash transactions with its customers.

1.2 STATEMENT OF THE PROBLEM

There are many problems companies encounter as a result of poor credit management. Thus, the problems inherent in this research study as investigated are as follows:
(1) There is a high rate of bad debts because some corporations take advantage of the credit that is extended to them and find themselves not able to pay debt later.
(2) The poor level of trade credit management is reflected in the liquidity and profitability position of the firm.
(3) The inability of business policy makers to certainly say how effectively, credit management other makes or mars the performance of the business in terms of profitability.
(4) Furthermore, lack of experienced staff or officers to tackle onerous and vital duties of managing debts appropriately.
(5) Also, limitation and inadequate training opportunities for key treasury or supporting staff.
(6) Finally, failure to comply with the agreed terms of agreement with the company upon when paying the debt.

1.3 OBJECTIVE OF THE STUDY

The main objective of this study is to appraise the impact of credit management on the profitability of manufacturing firms and also providing effective means of reducing default in collection of accounts.
Other objectives include the following:
(1) To appraise the effects of the credit management on the profitability of the company.
(2) Identifying the problems associated with credit management in manufacturing firms.
(3) To investigate the advantages of effective and efficient management of trade credit.
(4) To also show how to reduce losses caused by bad debt through the use of effective and sound collection policy and procedures.
(5) It is also very necessary for a firm to critically evaluate the individual account of the customers to enable it obtain the necessary credit
information about them and to devise appropriate collection procedures for effective collection of account.
(6) To examine whether the credit management principles applied by the firm is appropriate and effective.
(7) To encourage staff to always be at an alert in respect of knowing who their debtors are.

1.4 FORMULATION OF RESEARCH HYPOTHESES

PROJECT TOPIC-  IMPACT OF CREDIT MANAGEMENT ON THE PROFITABILITY OF A MANUFACTURING FIRM (A CASE STUDY OF UNILEVER PLC ABA, NIGERIA)

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BANKACCOUNT NAME
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DIAMOND BANK
FREEMANBIZ COMMUNICATION
007 031 2905
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FREEMANBIZ COMMUNICATION
560 028 4107
GTBFREEMANBIZ COMMUNICATION013 772 5121
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