RECEIVABLES FACTORING AND PERFORMANCE OF PRIVATE FINANCE COMPANIES IN KENYA: A CASE OF PRIVATE FINANCE COMPANIES IN NAIROBI CITY COUNTY
John Mathia Irungu - Masters Student, St. Paul’s University, Kenya
Mary Kibuine - St. Paul’s University, Kenya
Dr. John Muhoho - St. Paul’s University, Kenya
ABSTRACT
During the past two decades, SMEs have increasingly embraced invoice discounting as a practical source of working capital to bridge the gap between when they sell and collect payment from procuring entities. The objective of this study was to assess the relationship between invoice discounting and performance of private finance companies in Nairobi City County, Kenya. The study adopted descriptive and cross-sectional study designs. This study targeted 15 private financing companies that offer accounts receivable factoring services in Nairobi County of Kenya and four respondents per company thus having a total target of 60 respondents. The 60 respondents included business development managers, finance managers, credit administrators, general managers and CEOs. Primary data was collected using structured questionnaires and diagnostic tests and analysis carried out with the aid of SPSS version 23 to achieve accuracy and fast computing of the data in order to obtain information. A regression model was used to determine the relationship between the independent variables and dependent variable. The findings were presented in form of tables, charts, graphs and figures for easier interpretation. The regression model revealed a positive significant between invoice discounting a performance of private finance companies with a p-value of 0.000 accounting for 87.9% change. The study therefore recommended regulatory framework is developed to protect private finance companies from loss due to the level of risk involved in factoring of accounts receivables in Kenya.
