Literature Related Literature

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CHAPTER II Review of Related Literature This chapter presents a variety of related literature taken from different sources which provide significant insights in relation to the current study to be conducted by the researchers. Khachatryan, et al (2014). Microfinance is an innovation launched in Bangladesh in the 1980s within the framework of a very poor economy (Yunus, 1995; Rahman, 1999). Recent years have experienced global reforms and changes in financial systems around the world. A revolution is occurring in finance for low-income people in order to mitigate poverty level and to smoothen their income generation. Microfinance is seen as one of the successful tools, which comes to fill in the gap left by larger conventional financial…show more content…
Business enterprises today use trade credit as a prominent strategy in the area of marketing and financial management. Thus, trade credit is necessary in the growth of the businesses. When a firm sells its products or services and does not receive cash for it, the firm is said to have granted trade credit to its customers. Trade credit thus creates accounts receivables which the firm is expected to collect in future (Kungu, Wanjau, Waititu & Gekara, 2014). Accounts receivables are executed by generating an invoice which is delivered to the customer, who in turn must pay within and with the agreed terms. The accounts receivables are one of the largest assets of a business enterprise comprising approximately 15% to 20% of the total assets of a typical manufacturing firm (Dunn, 2009). Investment in receivables takes a big chunk of organization’s assets. These assets are highly vulnerable to bad debts and losses. It is therefore necessary to manage accounts receivables…show more content…
A key requirement for effective credit management is the ability to intelligently and efficiently manage customer credit lines. In order to minimize exposure to bad debt, over-reserving and bankruptcies, companies must have greater insight into customer financial strength, credit score history and changing payment patterns. The ability to penetrate new markets and customers hinges on the ability to quickly and easily make well-informed credit decisions and set appropriate lines of credit. Credit management starts with the sale and does not stop until the full and final payment has been received. It is as important as part of the deal as closing the sale. In fact, a sale is technically not a sale until the money has been

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