Credit Sales Risk Management in the Case of Libya Oil Ethiopia Limited

Abstract

This research deals with the Credit Sales Risk Management of Libya Oil Ethiopia Limited. The objectives of the research were to assess the management of credit sales risks in Libya Oil Ethiopia Limited. One crucial element that must be controlled is credit sales risk. Credit sales risk management is based on analyzing the creditworthiness of customers and is one of the most central risks for any company. It is caused by a debtor's failure to perform their responsibilities. The research was carried out on Libya Oil Ethiopia Ltd. One of the key elements assessing credit sales risk management is the potential for a customer to default on their payments. By evaluating the current practice, this research aims to propose potential solutions that could address this issue in credit sales risk management. A descriptive type of research method was used in conducting this study. The result of this study evidence that there is a big gap between the current company’s collection policies and procedure and current states of market computation therefore, Libya Oil Ethiopia Ltd has to revise the current policies and procedures in considering the current inflation, compotator and customer status. Trade debt has an impact on the company's performance by lowering its revenue and net income, the case thus supports the idea that the company needs strong credit sales risk management. The study’s findings indicate that setting clear credit sales, collection and receivable management is essential to effectively manage credit sales and improve the company’s performance.