Credit Terms As a Credit Management Practice And Financial Performance Of Government Youth Funded Enterprises In Webuyeeastsub-County, Bungoma County, Kenya

Abstract

Government youth funded enterprises that are in operation have had a deteriorating performance and have stagnated at small levels and hence do not progressively grow into large enterprises. This deteriorating performance has been attributed from inadequate Credit management skills. Therefore, the study sought to determine the effect of credit terms on financial performance of government youth funded enterprises in WebuyeEastSubCounty in BungomaCounty. The general objective of this study was to establish how Credit management practices affects government funded youth enterprises financial performance. Specifically, the study sought to establish the effect of credit terms on financial performance of government funded youth business.The study was based on theliquidity practice theory. Much of the available local empirical literature is in the banking context. Hence, this remains an area of empirical interest: this formed the motivation of the study. A descriptive survey design was adopted for the study. The target population for the study was 45 government funded youth enterprises who constituted the respondents. Data was collected through a structured questionnaire and financial records. Both descriptive and inferential statistics was used to analyze the data. Data presentation was done by the use tables for ease of understanding and interpretation. The investigation found that credit term policies (R=0.335, p = 0.025)has a positive significance correlation to financial performance.The study recommends government funded youth enterprises to be trained on credit term policies in their business to enhance good financial performance and ensures their survival on the market for a long time by knowing their customers and retaining them. The study also recommends government funded youth business operators to be trained on Credit management practices and the importance it has on their business before giving loans to them. The study also recommends youth enterprises to strictly keep record of information concerning their customers so that they regularly check the credit rating of their customers. They study also recommends youth business to rely on return on investments, net profit to measure their profitability and not rely on amount of sales as it doesn’t reflect true financial performance