Abstract
Accounts receivable management has become an essential component of working capital management, playing a critical role in ensuring business liquidity, operational efficiency, and long-term financial sustainability. It involves the formulation and implementation of effective credit policies, collection procedures, customer credit evaluation, receivables monitoring, and debt recovery strategies aimed at maintaining a healthy cash flow while minimizing bad debt losses. For Small and Medium Enterprises (SMEs), extending trade credit is often necessary to attract and retain customers, increase sales, and remain competitive. However, inefficient management of accounts receivable may result in delayed cash inflows, increased default risk, liquidity constraints, higher financing costs, and reduced profitability. In Nigeria, SMEs constitute a significant driver of economic growth, employment generation, poverty reduction, innovation, and industrial development. Despite their importance, many SMEs continue to experience financial challenges arising from poor credit management, inadequate record-keeping, weak internal controls, ineffective debt collection mechanisms, and limited access to external financing. These challenges frequently lead to cash flow shortages, business instability, and poor financial performance. Conversely, effective accounts receivable management enhances liquidity, accelerates cash collections, reduces bad debt expenses, improves working capital efficiency, and strengthens overall business performance. Although previous studies have examined working capital management and financial management practices, empirical evidence regarding the effect of accounts receivable management on the financial performance of Small and Medium Enterprises in Nigeria remains limited and inconclusive. Against this background, this study investigates the effect of accounts receivable management on the financial performance of Small and Medium Enterprises in Nigeria. The study is anchored on the Cash Conversion Cycle Theory, Trade Credit Theory, and the Resource-Based View (RBV). The Cash Conversion Cycle Theory explains that efficient management of receivables shortens the cash conversion cycle, improves liquidity, and enhances profitability. Trade Credit Theory posits that effective credit policies enable firms to increase sales while balancing the risks associated with delayed customer payments and bad debts. The Resource-Based View argues that effective receivables management constitutes a valuable organizational capability capable of improving financial efficiency, operational performance, and sustainable competitive advantage. Collectively, these theoretical perspectives provide a comprehensive framework for explaining the relationship between accounts receivable management and the financial performance of Small and Medium Enterprises in Nigeria. The study adopts a quantitative research design using a structured questionnaire administered to SME owners, accountants, finance managers, financial controllers, credit officers, cashiers, business managers, and other personnel responsible for financial management within selected Small and Medium Enterprises across Nigeria. A stratified random sampling technique will be employed to ensure adequate representation of SMEs operating in manufacturing, agriculture, wholesale and retail trade, construction, hospitality, healthcare, transportation, information technology, and other service sectors. Primary data collected from respondents will be analyzed using descriptive statistics to summarize respondents' demographic characteristics and perceptions regarding accounts receivable management and financial performance. Structural Equation Modeling (SEM) will be employed to examine the effect of accounts receivable management on financial performance. The measurement model will be evaluated using Cronbach's Alpha, Composite Reliability (CR), Average Variance Extracted (AVE), and Confirmatory Factor Analysis (CFA) to establish the reliability and validity of the research instrument. Additional diagnostic tests, including multicollinearity assessment, common method bias analysis, and model fit indices such as the Comparative Fit Index (CFI), Tucker-Lewis Index (TLI), Root Mean Square Error of Approximation (RMSEA), and Standardized Root Mean Square Residual (SRMR), will be conducted to ensure the adequacy, consistency, reliability, and robustness of the structural model. The study anticipates that accounts receivable management will have a significant positive effect on the financial performance of Small and Medium Enterprises in Nigeria. Effective receivables management is expected to improve cash flow, red
