This project is to enlighten, motivate and give understating on the significance of Credit management in business organization, the Chapter One aspect will give  details in background of study, statement of problems objectives, scope of study, definition of the terms, the working hypothesis, history review shall emphasis  on the need for credit management, credit policy, collection, level of risk, historical standard for credit worthness indicators, account of sales and credit insurance.

The chapter three involve the research methodology, research design, determination of population and sample size, processing data, reliability of data and validity of data, Chapter four is concern with presentation, analysis an interpretation of data.

The Chapter five at the project will design the summary, conclusion, literature, recommendation, references and questionnaire of the project.

Table of contents

Title page

Certification page

Dedication page



Table of contents


1.1 Background of the study

1.2 Statement of the problem

1.3 Objective of the study

1.4 Significance of the study

1.5 Scope of the study

1.6 Definition of terms

1.7 The working hypothesis

1.8 History of the company

1.9 Administration of a global soap


2.1 Literature review

2.2 The Need for credit management

2.3 Credit policy, credit control procedures, and credit reporting

2.4 Collection and deciding acceptable level of risk

2.5 Collection policies and procedures

2.6 Accounts receivable, account payable, and reconciliation of accounts

2.7 The role of debtors statement terms of sales

2.8 Selecting a creditworthy customer

2.9 Credit insurance


3.0 Research methodology

3.1 Research design

3.2 Types and method of data collection

3.3 Determination of population and samples size

3.4 Questionnaire design and administration

3.5 Processing of data

3.6 Questionnaire assumptions

3.7 Reliability of data

3.8 Validity of data


4.0 Presentation, analysis, and interpretation of data

4.1 Analysis procedures

4.2 Testing hypothesis


5.0 Summary of the major findings, conclusion, and recommendation of the study

5.1 Summary of the major findings

5.2 Conclusion

5.3 Limitations of the study

5.4 Recommendation of the study







In some years back, cash management has become the most important sector of the financial management in many trading organization. This is because without adequate cash, a business can not exist. For this reason, cash is often des  cribed as the life blood of a business and it controls the means of maintaining commercial health. This serves. To emphasis one vital message that liquidity is a pre-requisite for commercial life and cash management is as natural as staying alive.

For single purpose of securing sales, credit is extended to customers, credit sales, therefore, has been an essential tool of modern competitive economic systems. It is an important marketing tool to aid sales of goods.

Generally, it is made on open account (i.e. no formal acknowledgement, of debt. Obligation through a financial documents) but in order to achieve its aim of securing sales, it is essential therefore, that it achieves this and that it does so profitably.

Credit management is the term given to this, failure to apply such control, often leads to emergency collection of debts, and since total debtors are more in value and nature with the daily change in business there is no substitute for a proper credit management system many business that gives credit to its customers.

A carefully considered credit policy is needed by any company that sells goods or provides services on credit. The state of development that this policy has reached will obviously vary from one organization to another. In some companies goods may be sold on credit because competitors provide generous credit facilities and as a result no real consideration may have been given to the circumstances in which credit would be given or not. In not more efficient company, however credit policy will almost certainly have been considered much more seriously very often as part of the overall aims and objectives of the organization.

This is because credit policy can have a significance influence upon sales, credit policy provides framework to determine whether or not to extend credit to a customer and how much credit to extend. It operates through the credit standards and credit analysis. Credit standard gives the basic criteria for the extension of credit to a customer. This is done through some various mean like.

(a) Credit rating; looking into past records through agencies and deducing the credit worthiness.

(b) Credit reference: data of the prospective debtors as gather by bank, old customers e.t.c

On the other hand, credit analysis involves procedures for evaluating credit applicants

This will be proceeded by the collection of information. The services of information may be through

Financial statement: at the time of prospective sales the seller may request a financial statement as one of the most desirable sources of information for credit analysis. Having collected the credit information, be firm will make a credit analysis of the applicants.

Collection policy undertakes the combination of collection procedure it also includes the expression of credit terms. These are the terms and condition on which trade credit will be made available. It stipulates the repayment terms of receivables. Credit terms involve both the length of the credit period and the discounts given. This is essential control that no business could afford to ignore. It takes the liquidity problem of the business as its credit system and hence, the significance of credit management is necessary to be studied.


This research work is aimed at finding out the significance of credit management in business organization. Therefore, the research work looks into the under listed problems which might be facing the organization in order to draw inferences on the best solution to problem these are:

i) Whether credit extension have any effects on turnover

ii) Whether credit extension influence the stay of customer in a particular organization

iii) Whether credit extension have any positive or negative effect on the overall performance of the organization

iv) Whether credit extension is the cause of cash shortage i.e. liquidity problem


Sales is not complete until cash is in the bill, therefore, the control of debtors in an organization needs to be examined to know whether the aim of granting a credit might be achieved after all. Hence, the main objectives of this research is to examine the significance of credit management in business organization, others are

i) To find out the extent to which granting of credit increase sales.

ii) To know the problem(s) encountered as a result of credit sales due to violation of credit period.

iii) To the effect of credit sales in the overall performance of the organization

iv) To examine the relationship of credit management to the liquidity ratio of the organization

v) To find out the extent to which granting of credit influences the relationship between customers and the organization


The recent inflationary condition which has many organizations into liquidity problem is the concern of researcher. It has become more important than ever before to get money promptly from trade debtors, but in most case this has probed to be a difficult task, especially, where debtors have traditionally had little difficulty in obtaining substantial periods of credit, what surprise the researcher really was. His experience during his industrial attachment in global soap and detergent

The study is of immense important to all and sundry, as a result, the research work will.

i.) Broaden the scope of the research of the researcher on the significant of credit management in business organization

ii.) It will be of significance to any future researchers, who may want to carry out further study on this typical area

iii.) It will enable the company to realize the impact of credit management in the overall performance of the company.

iv.) The study will establish the fact that trade credit is advantageous to companies


Theoretically, this study is limited to finding out the significance of credit management in business organization. It considers how credit management can effectively help the organization to achieve its aims and objectives.

Geographically, the study will be limited to Global soap and Detergent Nigeria Limited and its vendors.

Though, I deally, the whole of Nigerian is expected to be covered but due to the problems of time and cost, therefore the findings is particular to all business organization in Nigeria.


SIGNIFICANCE: This simply means the importance of something

CREDIT: this is the ability to buy or borrow in consideration of promise to pay within a Stipulated period time, sometimes loosely specified following delivery.

MANAGEMENT: is the executive authority the combined field of policy and administration, a team of ten employees as a correlative decision making.

BUSINESS ORGANISATION: simply denotes a trading environment with the division of work, and the allocation of duties, authority and responsibility for the purpose of making profit.


Hypothesis is a proposition of theory put forward to account for and order a body of facts.

In scientific contexts, hypothesis are seldom capable of direct test but are tested indirectly by deducing consequences that are directly test.

There is null and alternative hypothesis

Null hypothesis (HO) is the assumption that there is no difference between the hypothesis and the sample result while the alternative hypothesis (Hi) described explanations not covered by the null hypothesis (Ho)

In other words, null hypothesis (Ho) is that, that is rejected in order to accept alternative hypothesis (Hi) and vice versa as the case may be.

Based on the statement of the problem, the following hypothesis have therefore been formulated for empirical study.

i. Ho: That credit extension does not increases study

Hi: That credit extension increases sales

ii. Ho: That credit extension does not help in keeping/maintaining customer

Hi: that credit extension help in keeping/ maintaining customer

iii. Ho: that overall performance of company operating credit system does not depend on its credit management

Hi: That overall performance of company operating credit system depend on its credit management

iv. Ho. That credit management does not help to avoid liquidity problem in organization

Hi: That credit management helps to avoid liquidity problems of organization


Global soap and detergent industries limited is a member of Doyin group of companies and its first wholly indigenes in soap and detergent manufacturing company in Nigeria. It was in corporated on the 8th October 1984 with its Head office in lagos and the factory situate along As a-Dam road Ilorin Kwara state. The company currently runs 18 depots through out Nigeria owned by courageous and experience industrialist prince (Dr) Samuel Adedoyin who had for many years been championing indigenous technology, backward integration and use of local raw material in Nigeria the company was established in response to the call of kwara state government on indigenes to join hands with the state government to industrialized the state.


The organization chart of this industry (global soap and detergent industries limited) was determined by the top management of the company it formulate the policies, and coordinates finance, production and distribution. They carryout the objectives and policies, which have been determined by the administration the chart was drawn up in 1995 and it is still used today the chart is shown bellow.




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