THE MANAGEMENT OF CREDIT SALES RISKS IN ETHIOPIAN PETROLEUM SUPPLY ENTERPRISE

Abstract

Making analysis about customers’ creditworthiness is the foundation of credit sales risk management. The possibility of customer’s failure in paying their dues is one of the main factors evaluating credit sales risk management. The purpose of this paper is to suggest possible solutions that may address this problem in the area of credit sales risk management by assessing the existing practice. A descriptive type of research method was used in conducting this study. The result of this study evidences that the Ethiopian Petroleum Supply Enterprise has no means to secure the collection of its credit sales. There is a big gap between the desired and the current credit sales risk management. The case thus reinforces the idea that the enterprise is in need of credit sales risk management. The results of the study show that setting clear risk management strategy, policies and risk appetite is a requirement so as tomanage credit sales/receivables risk effectively.