THE IMPACT OF RECEIVABLES MANAGEMENT PRACTICES ON THE GROWTH OF BUILDING MATERIAL COMPANIES IN MOGADISHU, SOMALIA

Abstract

Purpose:  This study is to determine how accounts receivable management techniques affect the growth of building material companies in the context of Somalian Building Material Companies.

Theoretical framework:  The Portfolio theory can be used to determine which customers should be awarded trade credit. Also, According to the portfolio theory, economic environment uncertainty has an impact on the decisions one is likely to make about investments. The idea claims that in order to reduce losses and risk and maximize returns, it is crucial to select and strategically mix choices and assets that offer lower risk and greater predicted returns.

Design/methodology/approach: The procedures have been determined to include accounts receivable analysis, accounts receivable extension, and accounts receivable collection. Both descriptive and inferential statistical methods were used in the investigation. A SmartPls was used to analyze the data, which was collected from 95 questionnaires distributed to chosen employees of five building material companies.

Findings: The findings show that receivable analysis and collection both have positive effects on business growth. On the other hand, the results indicate that receivable extension has a good impact on business growth.

Research, Practical & Social implications: The study suggested owners and managers take seminars and receive training on the various techniques for controlling and managing the levels of accounts receivable. Additionally, the study would contribute to the body of knowledge and act as a foundation for further study.

Originality/value: Testing and subsequent confirmation of receivable analysis and collection both have positive effects on business growth such as   According to the findings, improving accounts receivable collection tactics by one unit leads to a 0.363% increase in growth, demonstrating that these procedures are favorable for the growth of construction material companies.  The path coefficient (0.208), which states that a one-unit rise in accounts receivable extension processes causes a 0.208-unit increase in the growth of building material companies, illustrates this.

Key Words: Accounts Receivable, Analysis, Extension, Collection, Company Growth