A survey of factors influencing credit control and performance of firms .a case study of pharmaceutical industry in kenya

Abstract

The pharmaceutical industry is highly complex. The technologies leading to drug discovery and development are at the limits of human knowledge. The huge size of the companies and the complexities of their processes and technologies present many organizational and management challenges such as credit control, cash flow and cash management. The study investigated the factors influencing credit control and performance of the selected Pharmaceutical Companies in Nairobi. The study used descriptive survey design. The population of this study comprised of pharmaceutical firms involved in importation and distribution of generic pharmaceutical products. These distributors and representatives were based in Nairobi. The data collection instrument used was a questionnaire designed specifically for the study. The study applied a quantitative approach through the use of frequency of distribution, mean scores and standard deviations to analyze the data. With the help of Statistical package for Social Science (SPPS) and Microsoft Excel the findings were then presented in the form of frequency distribution tables, bar charts and pie charts. The findings shows that information sharing on credit availability and credit rationing improve access to finance. ICT allows electronic servicing and administration of loans within the firm. The study concluded that sharing influences credit control policies. Credit availability and credit rationing improves access to finance. Strategic alliances have led to the improvement of credit operations and competiveness of the firm. The study recommended that that the pharmaceuticals should be encouraged to exercise business information sharing with other institutions. By exchanging information about their customers, pharmaceuticals can improve their knowledge of applicants' characteristics, past behavior and current debt exposure. ICT within the pharmaceuticals would reduce transaction costs within the organization and allow the realization of economies of scale. Further it would enable the implementation of a risk-adjusted pricing throughout the organization.