Credit Collection Practices at Picfare Industries Limited.
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Date
2025-11-28
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Makerere University Business School
Abstract
This study assessed debt collection practices at Picfare Industries Limited in Kampala, Uganda. The study was motivated by the increasing level of trade receivables and bad debts experienced by the company despite extending credit to customers as a strategy for increasing sales and market share. Specifically, the study sought to assess the debt collection practices employed by the company, examine the challenges encountered during the debt collection process, and propose strategies for improving debt collection effectiveness. The study adopted a quantitative research approach using a cross-sectional survey design. A sample of 123 respondents was drawn from customers and staff of Picfare Industries Limited from a target population of 180 using the Krejcie and Morgan (1970) sample size determination table and simple random sampling. Primary data were collected using structured questionnaires and analysed using the Statistical Package for Social Sciences (SPSS) through descriptive statistics, including frequencies, percentages, means, and standard deviations. The findings revealed that Picfare Industries Limited employs several effective debt collection practices, including sending regular payment reminders (Mean = 4.86), monitoring customers' payment patterns (Mean = 4.85), placing overdue accounts on hold to prevent additional credit sales (Mean = 4.83), and encouraging customers to repay debts through instalments (Mean = 4.26). However, the company rarely uses third-party debt collectors, restructures overdue debts, charges interest on overdue accounts, or institutes legal action against defaulting customers. The study further established that debt collection is constrained by delays in internal communication (Mean = 4.76), reliance on manual debt collection systems (Mean = 4.73), limited customer payment options (Mean = 4.68), debtors ignoring collection calls (Mean = 4.58), inefficient debt collection teams, inadequate customer awareness of payment terms, and frequent claims of lost invoices. To address these challenges, respondents recommended adopting technological debt collection systems (Mean = 4.85), conducting borrower education (Mean = 4.83), attaching invoices to payment reminders (Mean = 4.71), providing incentives to debt collection staff, ensuring pricing accuracy, printing and mailing invoices promptly, and clarifying payment terms through formal agreements before transactions. The study concludes that although Picfare Industries Limited has established fundamental debt collection practices, their effectiveness is limited by operational inefficiencies, inadequate automation, and weak customer communication. The study recommends investing in automated debt management systems, strengthening staff capacity, expanding payment channels, enhancing customer education, and developing clear debt collection policies to improve receivables management, reduce bad debts, and strengthen the company's cash flow and financial performance.
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This is a master's thesis.
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Citation
Kasemiire, V. (2025) Credit Collection Practices at Picfare Industries Limited. (Unpublished master's dissertation). Makerere University Business School, Kampala, Uganda.