Credit Management Policies and Management of Debtors in The Sugar Manufacturing Companies in Kenya

Abstract

The purpose of this study was to examine the credit management policies and management of debtors in the sugar manufacturing companies in Kenya. The core problem affecting Kenya’s sugar industry is the persistent deterioration in performance due to insufficient prudent financial management practice. Firms each year experience declining profitability leading to receivership while some are faced with imminent collapse due to huge debt burden and the inability to sustain their operations since they are not able to break even. Poor management and control of accounts receivables leads to increased cash flow problems thus distracting the daily operating activities. Additionally, it leads to inability to pay workers, pay for products and service delivered and meet other statutory obligations. The target population of the study was 288 employees in finance and sales department. A sample of 177 respondents was selected using stratified random sampling in each sugar industry. Structured questionnaires were used to collect primary data and Descriptive statistics and inferential statistics were used during data analysis. The results revealed that credit management policies are significant in sugar manufacturing firms using standardized b coefficients in simple linear regression. The coefficient was 0.710 with p-value (0.000) which was found to be significant at 0.05 significance level suggesting the existence of a strong positive relationship between credit management policies and management of debtors. Board of Directors also had an enhancing moderation effect on the relationship between Credit Management policies and Management of debtors. The study recommends that sugar manufacturing companies should develop and enforce a well-defined credit control policy framework to strengthen credit management systems which should encompass ways of reducing average collection period and hence huge debt.

Keywords: Management of debtors, credit management, financial management

DOI: 10.7176/EJBM/18-8-05

Publication date: August 30^th 2026