The Effects Of Management Of Accounts

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This research titled, ‘the effects of he management of accounts receivables on the performance of public corporation” was aimed at finding out all the factors that affect the level of receivable of public corporation reasons behind the huge amount of debts being owed this corporation and most importantly how the combine effects of these factors affect their performances generally.

This in line with the reasoning that the issue of the receivables and the problems usually arising from its poor management does not in any way exclude public corporation since most of them as well provide services on credit.

The research itself was designed to be descriptive, consequently, the survey research approach was adopted. Based on this public corporation the National Electric Power Authority (NEPA) were randomly selected as the sample. The sample size consisted of two hundred and ninety persons chosen from the three hundred customers to whom questionnaire were administered and also one hundred and twelve persons chosen from the one hundred and twenty employees of the sample co-operation to whom questionnaires were administered also in addition two different sets of questionnaire were designed for this study. While one as administered to the customers of the sample corporation, the other was administered to the employees.

Subsequently, information collected wee analysed using tables and simple percentage. Additionally, the chi-square dist and co-efficient of correlation were used in testing the hypothesis formulated in order to prove or disprove them after which the findings from the study were summarized and conclusions drawn from them.

The study showed that such factors as, the rates being charged for this corporations’ services the billing system the general economic situation in the country and the working conditions of the staff are some of the factors that influence receivables of public corporation. It was further discovered that inefficient management of receivables by public corporation directly and indirectly lead to such problems as illiquidity, irregular payment of workers salaries and other entitlements, employees less of motivation and high labour turnover all of which affects the per of public corporation negatively.

However, in view of the findings made from the study and conclusion drawn there from that how public corporation manage their receivables grossly affect their performance either directly or indirectly in the forms mentioned above, some recommendations were made in chapter five of this report and it is hoped that these recommendations are adhere to, there will be significant and justifiable improvements directly on their performances most especially in Enugu district and then the nation as a whole.



1.1              Background of the study

1.2              Statement of the problem

1.3              Purpose of the study

1.4              Significance of the study

1.5              Formulation of hypothesis

1.6              Scope and limitations of the study

1.7              Definition of terms

1.8              Information of the case studies.

1.9              Brief historical background of NEPA

1.10          Brief historical background of water corporation



2.1              The concept of accounts receivable

2.2              Observation of accounts receivable


3.1              Research design

3.2              Description of population

3.3              Method of data collection

3.4              Sample size

3.4.1        Administration and retrieval questionnaire

3.5              Description of questionnaire

3.6              Method of data analysis

3.7              Method of testing hypothesis



4.1              Objective one

4.2              Objective two

4.3              Objective three

4.4              Test of hypothesis

4.4.1        Test of hypothesis one

4.4.2        Test of hypothesis two

4.4.3        Test of hypothesis three



5.1              Summary of findings

5.2              Recommendations

5.3              Conclusion



Questionnaire for NEPA and Water corporations customers

Questionnaire for Water corporations staff


1.1              BACKGROUND OF THE STUDY

Ordinary, the significance of granting trade credit by firms and organisations 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 wholesaler and retailers to the consumers.

This granting of credit to customers through mostly used by commercial/private enterprise is in no way restricted to them alone as it is also used extensively by public corporations of these public corporations in National Electric Power Authority (NEPA), the Nigeria Telecommunications Plc (NITEL),  Water corporation etc. The reasons these public corporations also grant credit to their customers 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.

The second reason being for these public corporations to take full advantages of the economics of scale since for them to have insisted on cash payment the point of consumption would have been undisputedly led to avoidable lower sales being recorded.

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. National Electric Power Authority (NEPA) for instance, people would have gone for generators, rechargeable laterns lamp etc in place of service provided by NEPA.

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 NEPA, 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. NEPA for instance has recently been battling with the over increasing debt (over N5b) owed to it by various calibers of consumers nationwide.

These have been the bane that public corporations especially NEPA in their quest to provide qualitative and unbearable service to entire populace and hence, the need to appraise their performances vis-a-vis the management of their book debts.



Long over the years, there has been a general and widespread agitation by the Nigerian populace for efficient performance by public corporations most especially those of them that have a direct and equally noticeable impact on their lives like the National Electric Power Authority, (NEPA). Agreed that this corporation have to provide essential service even on credit basis to the citizenry just to make up, it is disheartening to note that it has instead ended up accumulating a huge amount of debt apparently more huge than it could management effectively.

For instance, NEPA alone is being owed to the turnover N5b as reported in the fourth page of business times of 16th February 1999. This can be appreciated if it is realized that this amount being owned NEPA is greater than even the entire budgetary allocation to the power and steel sub sector.

Though public corporations are generally believed to be engaged in the production essential goods and services to the entire populace at relatively low prices, it should be noted that for this function to be performed creditably, adequate provision of tools, equipment and other necessary material have to be made in addition to a sound management team. Howe very, with the usually so noticeable financial constrains, these never materialize that easily as efficiency no doubt, is most times faceable to availability and good management of funds. Availability of fund here is a necessity.

Therefore there is no gain saying the fact that the gigantic debt being owed NEPA has had a rather adverse on its performance generally as this corporation among other problem have found it extremely difficult replacing broken – down strategic facilities used for the generation, transmission and proper distribution in NEPA due to lack of funds and this has in a way crippled the effort of this corporation towards making greater impact on the lives of generality of the populace.

In view of the foregoing, the researcher intends to find out.

a.                   Whether exogenous factors may be responsible for the level of accounts receivables of public corporations.

b.                  Whether exogenous factor may be responsible for the level of accounts receivables of public corporations.

c.                   Whether the level of accounts receivables will influence the performance of public corporation.


1.3              PURPOSE OF THE STUDY

The main task this research work set out to accomplish can be articulated as follows:

a.                   To find out how exogenous factor influence the level of accounts receivables of public corporations.

b.                  To determine how endogenous factor influence the level of accounts receivables of public corporation.

c.                   To identify the relationship between the management of account receivables and the performance of public corporation.

d.                  To recommend workable solutions that will alleviate the problem of debt arising from account receivable being encountered by public corporation.


1.4              SIGNIFICANCE OF STUDY

The result of this would be of primary importance to public corporation since the management are interested in preferring solutions to reduce if not entirely eliminate the huge amount of book detor as a result of credit granted to customers.

Specially, it will highlight the importance of good management of receivable to the survival, growth and efficient performances of public corporation.

It will also highlight even for these involved in formulation and implementation of credit policies in private enterprise, the adverse effects of an inefficient management of trade credit on the performance of this companies and conversely, the benefits to be derived from proper management.

For the general public, this study will show the importance of consume interest and awareness in the performance of public corporation as it will create an awareness on the obligation that consumers owe to the survival of public corporation. This no doubt will for ters the ideal producer consumer relationship which is newspaper for growth and efficiency of this corporation.

Lastly the research will serve as a reference material that will aid financial managers in credit management as well as providing a valuable source of information for future researcher.



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.



Trade Credit:            This refers to the selling of goods and services to

customers on the condition that they pay later.

Accounts receivables:  This is an amount of money to be received

from customers in payment for goods and services provided to them on credit exogenous factors. Factors operating outside an organisation but affecting it within.

Endogenous factors: Internal factor that affect an organisation.

Public corporation:  Any government owed company which as

corporate entity.

Credit policy:             The criterion on the amount of credit to be given out

is based.

Credit standards: These are steps taken to analyze credit applicants

in order to known which of them that qualities to be given credit and the extent of the credit.

Collection policy:  The decision variable that influences when and

how trade credit given is to be collected.

Billings:                      The computation of total amount payable by a

consumer for the units of electricity consumed.


Metering:                   This refers to the way in which the units/amount of

electricity consumed is determined.

Liquidity:                   The ease and speed which current asset are turned into cash, enough to meet current liabilities.

Bad debts:      Specific debt classified to be uncollectible in whole

or in part either because the creditors finds it impracticable to enforce or the debtors can no longer pay.



The first power station of NEPA was built 1890 under the government of southern Nigeria, with preliminary investigation and planning carried out by the public works department (PWD), it operated from 6pm – 11pm daily with a maximum demanded of twenty four kilowatts. However, with the increasing demand, the generating capacity of power stations were increased to three hundred and twenty kilowatts in 1916.

In 1926, some imitative were taken by the government to improve electricity supply. Some of them are:

–       the construction of addition power stations in Port-Harcourt, Kaduna, Enugu, Maidugurit etc

–       the establishment of a meter section to del with the metering of various consumers

–       the introduction of the two parts tariff system that replaced the flat-rate being charged previously etc.

By 1946 however, the rate of expansion of electricity had gone by the scope of the public works department hence a separate establishment known as the Nigerian Government Electricity Undertaking (NGEU) was established by the government electricity department of the PWD. This Nigeria Government Electricity Undertaking (NGEU) formed the platform on which the incorporation of the Electricity of Nigeria (ECN) was conceived and carried out on July 6, 1950 following ordinance No 15 of 1950.

The ECN then took over the undertakings previously done by the NGEU and thus became the statutory body responsible generating, transmitting, distributing and selling of electricity to all consumers nationwide. But because of the large landmass of the country coupled with lack of communication equipments, the ECU decided to split itself into regional organisation and these regions were even later spited into three districts each in order to achieve close relationship and more efficient and effective organisation.

However, when the power demand growth of the nation could no longer be methodology by the use of steam and diesel generating plants, it was the ECN that suggestion to the government that the power potentials of River Niger be exploited. Specifically, it recommended that the Niger be dammed at a suitable position near Jebba and then the hydro power be developed and transmitted to all the load centre in the country. The establishment of Kanji – Dam and the power stations was seen as a major break through of the ECN and subsequently in 1962, a separate government establishment known as the Niger Dams Authority (NDA) was establish to manage this and other Dams.

But perhaps, in a bid to avoid duplication of functions by the NDA and the ECN, the then federal military government decided to merge their activities and so, during a budget speech in March 1972, the then military Head of state Major General Yakubu Gown (Rtd) declared that in the interest of the interest of affording the nation a well  co-ordinted system of electricity generation and supply, the NDA and the ECN are now merged into a new establishment to be known as the National Electric Power Authority (NEPA) and thus by Decree No 24 1972 was established.

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