CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Ordinary, the significance of granting trade credit by firms and organizations in current day activities in Nigeria cannot be over-stressed. This is because trade credit acts as an indispensable marketing device providing the easier ‘bridge’ through which goods and services are conveyed from the producers through the purchaser’s. This granting of credit to customers through mostly used by commercial/private enterprise is in no way restricted to them alone. The reasons this power Holding company of Nigeria (PHCN) also grant credit to their customer are not too. Far to fetch, the first being that it gives them the advantages of billing their customers for services provided to them based on actual consumption rather than on mere estimates. The import of this is corporations are saved the trouble of petitions, protest and even legal actions that would have taken much of their time and money too. Also, insisting on cash-based transactions would have amounted to putting themselves at a very disadvantages position as they would have lost most of their customers to other competitors or even to substitutes being produced in large quantities all over the country. Power Holding company of Nigeria (PHCN) for instance, people would have gone for generators, rechargeable laterns lamp etc in place of service provided by PHCN. These in no doubt would have led to diseconomies of scale and its apparently consideration of all these that most public corporations in Nigeria seem to have consistently over-looked or even ignored adopting payment on cash basis as the solution to their numerous financial problems as being touted by some people. However there is a problem usually associated with trade credit and that is, how to management it to avoid creating problems for the business vis-à-vis its per. For instance, from the financial reports of public corporation like Power Holding company of Nigeria (PHCN), it could be virility be seen that receivables make up a larger portion of their current asset figure and this not without its attendant problem recovery risk. The performance of public corporation To recommend workable solutions that will alleviate the problem of debt arising from account receivable being encountered by public corporation.
FORMULATION OF HYPOTHESIS
The following hypothesis stated in null form will be tested in this study.
1. Exogenous factor have no relationship with the level of accounts receivable of public corporation.
2. Endogenous factor have no relationship with the level of account receivable of public corporation.
3. Poor management of account receivable and efficient performance of public corporation are directly correlated.