This chapter introduces the background to the study, which in turn brings out the justification for carrying out the study in the particular area chosen for the case study. The chapter moves on to state the statement of the problem as well as the objectives to be achieved by the carrying out of the study. The delimitation, limitations, and assumptions to be assumed when carrying out the study will be stated. The importance of carrying out the study will be explained. The chapter closes by defining key terms of the research and gives a brief overview of the organisation of the research. A summary of the chapter will be provided.
2. BACKGROUND TO THE PROBLEM
In recent years companies have closed due to a number of reasons. Topping on list reasons is the failure to manage the working capital component particularly debtors. The issue of liquidity has been the cause of many corporate failures.
MIDLANDS STATE UNIVERSITY (M.S.U) is facing a similar problem. The company has a ballooning figure of debtors in its accounts. The problem arising out of the monies tied up in debtors is that the company is experiencing cash-flow problems. The failure to finance day-to-day operations is a cause of concern. Delays in payment of both employees’ salaries and creditors are a common phenomenon in the company.
1.3 STATEMENT OF THE PROBLEM
Is there debtors control system and revenue collection system at MIDLANDS STATE UNIVERSITY?
1.4 SUB PROBLEMS
Is there a revenue collection policy?
Is there debtor’s control?
Is there debt collection?
1.5 RESEARCH OBJECTIVES
➢ To establish the debtors control system being used by M.S.U ORGANISATION
➢ To evaluate the current debtors control system.
➢ To make appropriate recommendations that improves the debtors control system.
The research will be conducted in the bursary department of the MIDLANDS STATE UNIVERSITY.
1.7 LIMITATIONS OF THE STUDY
Limited Financial Resources:,
Interviewing all people in the finance department as well as the assembling of the final copy was a potential limiting factor. Efforts were made to secure funds in advance for all the requirements for the project.
Time allocated for the research was not enough to cover all sections and interview everyone. Sampling was used to select people.
Confidentiality of information:
Some respondents did not fully disclose sensitive information as required for the project. The researcher assured all the respondents by way of written documents on that the information they provide would be treated with strict confidentiality and will be used solely for this project.
➢ Personnel in the bursary department are qualified and well experienced to handle all matters relating to debtors control and revenue collection. ➢ Debtors are paying on time.
➢ All resources required for credit control are available. ➢ Information obtained from the department is correct
1.9 IMPORTANCE OF THE STUDY
1) The research is a requirement of the Bachelor of Commerce Honours Accounting degree the researcher is undertaking.
2) A successful completion of the study will help the company used as a case study. The recommendations made from the research findings will become the basis for the taking of corrective measures to improve operations.
3) The research will provide an important starting point to other researchers who might want to research in the areas of credit control and debt management in future.
The problem prompting the study was introduced and the background given. The statement of the problem was highlighted and objectives stated. The delimitation and the possible limiting factors have been highlighted including the organisation of the study....