Efficiency overload: Minimizing account receivable for SMEs financial performance surge during COVID-19 pandemic in Nigeria

Abstract

The Covid 19 pandemic posed a threat at the beginning to human existence, and later its effects had negative consequences on the global economy with a particular reference to Small and Medium Scale business enterprises. Studies indicated that SMEs during the period of the pandemic were incapacitated when compared to other corporate entities as a result of insolvency and liquidity problems, and their inability to source funds from outside. The study investigates the influence of the minimization of accounting receivables on SMEs' financial performance as a bootstrapping strategy during the period of the COVID-19 Pandemic. In achieving the said objective, the study, employs primary data using a structured questionnaire on a four-point Likert’s rating scale administered to 362 Small and Medium Enterprises (SMEs) as sample units drawn from the registered SMEs in Kano State using Slovenes’ formula. The study also applied a simple random probability sampling technique to allow each unit (SME) an equal chance of participation in the survey. To investigate if there is a significant relationship between the variables the study employed multiple regression analysis as a statistical tool to test the study hypotheses. Findings from the study indicate that credit policy, average collection period, and trade discount were significantly influential factors in SMEs' financial performance during the COVID-19 pandemic. The study recommends that SMEs should engage in aggressive credit policy, set a stringent collection date, and allow trade discounts for those willing to pay in time.