Tapping the Business -Business Credit Management Strategies. A study on Performance of Small and Medium Enterprises in Kenya

Jesse Gatua maina^1, and Stephen Makau Muathe¹

¹School of Business, Economics and Tourism Kenyatta University

Cite this paper:
Jesse Gatua maina and Stephen Makau Muathe. Tapping the Business -Business Credit Management Strategies. A study on Performance of Small and Medium Enterprises in Kenya. Journal of Business and Management Sciences. 2026; 14(4):93-106. doi: 10.12691/jbms-14-4-2

Abstract

SMEs in Kenya face challenges such as limited access to financing, high compliance cost and cash flow management challenges. This study examines the effect of Business-to-Business credit management strategies on the performance of Small and Medium Enterprises in Nairobi City County, Kenya, to address cash flow management challenges. It focused on four key strategies: credit assessment, credit terms, monitoring of accounts receivable, and debt collection. The study is grounded on four theoretical frameworks: Resource based view, Transaction cost theory, the contingency Theory, and dynamic Capabilities Theory. Descriptive research design was used, using Yamane's algorithm and stratified random sampling, 187 companies were chosen. Structured questionnaires were used to collect data. To confirm the reliability of the questionnaires, a pilot test comprising of 19 participants (10% of the total sample) was carried out prior to the main study. The content validity was established by evaluating the questions, and reliability was established by carrying out a Cronbach’s Alpha test, resulting in a score above 0.7, thus indicating its suitability. Data analysis was done using both descriptive and inferential statistics. From the study, it is clear that credit assessment has a positive and significant impact on the financial performance of SMEs.

Keywords:
Small and Medium Enterprises economy growth job creation credit management cash flow credit assessment credit terms

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