The Effects Of Management Of Accounts Receivables On The Performance Of Public Corporations (a Case Study Of Nepa)

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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.



Title Page                                                                                 i

Approval page                                                                 ii

Acknowledgement                                                           iii

Abstract                                                                           vi

List of tables                                                                    v

Table of contents                                                            

List of figures



1.1      Background of the study                                          1

1.2      Statement of the problem                                                3

1.3      Purpose of the study                                                5

1.4      Significance of the study                                          6

1.5      Formulation of hypothesis                                       7

1.6      Scope and limitations of the study                           8

1.7      Definition of terms                                                  9

1.8      Information of the case studies.                              11

1.9      Brief historical background of NEPA                                11

1.10  Brief historical background of water corporation    11



2.1      The concept of accounts receivable                                 14

2.2    Observation of accounts receivable                                 17



3.1      Research design                                                      27

3.2    Description of population                                                28

3.3    Method of data collection                                                28

3.4    Sample size                                                             29

3.4.1           Administration and retrieval questionnaire             29

3.5      Description of questionnaire                                   31

3.6    Method of data analysis                                           32

3.7    Method of testing hypothesis                                  32



4.1      Objective one                                                  33

4.2      Objective two                                                           41

4.3      Objective three                                                                45

4.4      Test of hypothesis                                                   49

4.4.1Test of hypothesis one                                            50

4.4.2Test of hypothesis two                                             53

4.4.3Test of hypothesis three                                          55




5.1      Summary of findings                                                60

5.2      Recommendations                                                   63

5.3      Conclusion                                                               65

BIBLIOGRAPHY                                                          68

Appendix i

Appendix ii














Ordinary, the significance of granting trade credit by firms and organizations 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 purchaser’s.

This granting of credit to customers through mostly used by commercial/private enterprise is in no way restricted to them alone.

The reasons this power Holding company of Nigeria (PHCN) also grant credit to their customer 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.

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. Power Holding company of Nigeria (PHCN) for instance, people would have gone for generators, rechargeable laterns lamp etc in place of service provided by PHCN.

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 Power Holding company of Nigeria (PHCN), 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.

The performance of public corporation

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



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.        




        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 organization and these regions were even later spited into three districts each in order to achieve close relationship and more efficient and effective organization. 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.



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.





This research cover the credit management policy and practice of NEPA but for obvious reasons with particular reference to Enugu district.

However it did not cover such aspect of total account receivable, as prepaid expanses, loans and advances to staff, etc but rather was restricted to the customers accounts payable being this corporation receivable.

There are some noticeable constraints on the course of study for most of them being the unavailability of current annual report of the public corporation studied. In NEPA the researcher used the annual report of 1993 and 1994.

In addition as a result of limited number of literature on this topic, only works by certain authors were taken into consideration in the review of related literature.

Lastly, the researcher decided to study only a small sample from the large populace of public corporation because of the very short time available for the study in addition to the monetary consideration.


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