A STUDY OF CREDIT MANAGEMENT PRACTICES OF SMALL BUSINESS ENTERPRISES

This study investigates the credit management practices of small business enterprises (SBEs) and their effect on financial performance and sustainability. Using a mixed-methods framework, the study integrates both quantitative data from surveys and financial records of 100 small- and medium-sized enterprises (SMEs) and qualitative data collected through structured interviews of business owners and managers. They identify the most common credit management practices including the use of credit scoring, assessments of customer creditworthiness, and credit limit setting. Additionally, as it illustrates the main issues experienced by SBEs, such as high customer default rates, lack of access to financing and inappropriate supply of advanced credit management training. Using quantitative data through SPSS analysis shows that there is a positive correlation between structured credit management practices and better financial performance, where closing and open businesses show improvement in cash profitability and decreased rate in chance to default. The thematic analysis of the qualitative data also highlights the role of external financial institutions playing an important role in addressing SBEs’ credit needs. These findings highlight the need to incorporate affordable technology and ingenious solutions that can help enhance credit management processes. The research presents successful solutions that overcome key barriers like incredibly limited financial literacy and the scarcity of resources that undermine the quasi-growth of small businesses, along with actionable recommendations for business owners, policymakers, and financial institutions alike to employ in their pursuit of the Dream. It suggests policy initiatives such as formal credit policies, financial literacy programs and fostering partnerships between SBEs and microfinance institutions. By doing so, it aims to fill the existing gap in the literature on best practices by providing a comprehensive overview of how such facilities can be developed through a process of clear needs assessment for improved credit management by SBEs, in relation to their customers, suppliers and financial institutions and with regard to the regulatory environment