THE VALUE OF EFFECTIVE CREDIT MANAGEMENT
TO SMALL SCALE BUSINESS IN NIGERIA
INTRODUCTION
Management of small business is as complex as the big one. Account receivables are important assets and valuable part of the working capital. Effective management of this component is very crucial to any type of business for its survival and for ensuring its growth. Effective credit administration will not only ensure continuity but can make small business to become big.
Problems in credit management has been a cause of failure to many businesses most especially small ones which are more vulnerable. This paper will try to highlight the value of good administration of credit to the small business. It is an important component of working capital. The paper is looking at the meaning of small business and the nature of credit in general.
SMALL SCALE BUSINESS
There is no universal accepted definition of small scale business. Several definitions were presented by the various agencies but each is based on its own perspective or point of view. Whatever the case the adjective, small provide a yardstick and a pointer that the business is small in nature. Small is different from large. The Central Bank of Nigeria addresses the small scale business from assessing its annual turnover while the Federal ministry of commerce and industry looks at the total investment or working capital to classify size of business. The United Nations Industrial Development Organization(UNIDO) is more concerned on the number of employees a business has, to determined its size. It is a micro firm, small firm, medium firm or large firm. Defining small scale business is necessarily arbitrary because people adapt particular standard for particular purpose [Longeneder, Moore and petty (1997) ].
The Small and Medium Industries and Equity Investment Scheme defines Small and Medium Enterprises as any Enterprises with a maximum asset base