An Evaluation of the Effectiveness of Debtors’ Management Systems: a Case Study of Puzey and Payne
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AN evaluation of the effectiveness of debtors’ management systems:
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A CASE study of puzey and payne INTRODUCTION
1.0 Introduction
This chapter briefly provides the background of the study on the effectiveness of debtors’ management systems at Puzey and Payne, Harare. In this chapter, the researcher rationalized the topic, clarified the objectives, research questions, significance of the study, delimitations and limitations of the study as well as the background leading to the study. 1.1 Background to the Study
Puzey and Payne realizes its profits from cash and credit sales of motor vehicles and spare parts and servicing of motor vehicles. In the current turbulent economic environment, the company suffers the consequences of debt defaults since the greatest percentage of the company’s sales are on credit basis. The company reduced the debt payment period from 30 to 70 days. Debtors were failing to meet their due dates and as a result the company was encountering cash shortages which posed a negative impact on the company’s operations. In the current dollarized economy, Puzey and Payne was failing to realize profits since most of its debtors were failing to settle their arrears on time. Defaulting debtors and long term debtors’ turnover have also affected the company’s relationship with its own creditors since the company was failing to pay its debts on time. Defaulting debtors caused a stand still on the profitability of the organization. Long term debtors’ turnover forced the company to operate on overdraft, which attracted high interest rates thereby reducing the company’s profits. Puzey and Payne has lost much of its business to its rivals such as Clover Leaf Nissan Motors, Amalgamated Motors Corporation and Amtec just to mention a few due to a poor debtors’ management systems (National Credit Rating-NCR
AN evaluation of the effectiveness of debtors’ management systems:
-------------------------------------------------
A CASE study of puzey and payne INTRODUCTION
1.0 Introduction
This chapter briefly provides the background of the study on the effectiveness of debtors’ management systems at Puzey and Payne, Harare. In this chapter, the researcher rationalized the topic, clarified the objectives, research questions, significance of the study, delimitations and limitations of the study as well as the background leading to the study. 1.1 Background to the Study
Puzey and Payne realizes its profits from cash and credit sales of motor vehicles and spare parts and servicing of motor vehicles. In the current turbulent economic environment, the company suffers the consequences of debt defaults since the greatest percentage of the company’s sales are on credit basis. The company reduced the debt payment period from 30 to 70 days. Debtors were failing to meet their due dates and as a result the company was encountering cash shortages which posed a negative impact on the company’s operations. In the current dollarized economy, Puzey and Payne was failing to realize profits since most of its debtors were failing to settle their arrears on time. Defaulting debtors and long term debtors’ turnover have also affected the company’s relationship with its own creditors since the company was failing to pay its debts on time. Defaulting debtors caused a stand still on the profitability of the organization. Long term debtors’ turnover forced the company to operate on overdraft, which attracted high interest rates thereby reducing the company’s profits. Puzey and Payne has lost much of its business to its rivals such as Clover Leaf Nissan Motors, Amalgamated Motors Corporation and Amtec just to mention a few due to a poor debtors’ management systems (National Credit Rating-NCR