ASSESSMENT ON CREDIT ADMINISTRATION PRACTICE The Case of Vision Pharma

Abstract

The Ethiopian pharmaceutical industry employs trade credit throughout its supply chain system, and as a member of the industry, Vision Pharma also conducts trade credit, making it the main trading system for the distribution of its pharmaceutical products. Sincemanagement of trade credit has atremendous effect on organizational performance, the study is determined to achieve the objectives of describing the actual practices of credit administration of the company, identifying the problems faced in its administration and identifying solutions for the improvement of its trade credit practice. This assessment has revealed the practices of the company in its trade credit administration and also identified problems associated with it using descriptive method. Huge accounts receivable records, inconsistencyin using credit instruments,weak legal action taking stand against defaulting customers, and undermining competitors’ performance in relation to trade credit are the major problems of the organization identified in this assessment. Accordingly, development of receivable account managing and evaluation schemes,proper implementation of credit instruments, defined legal actions towards handling defaulting customers, and periodical market analysis and assessment to evaluate competition are believed to help improve its present performance of trade credit administration practice of the organization. In general, the assessment has brought the detailed processes which made the organization out perform its competitors and presented solutions on how to further make it better.