ABSTRACT
Credit Management system is a set of policy measures that are designed by each individual business entity to minimize costs associated with extension of credit while maximizing the benefits from it. The purpose of the study is to establish the effectiveness of credit management system in preventing financial resource loss through bad debts. With effect to increase in trade debtors and bad debts, the researcher sought to study and find out the relationship between credit management system and performance of private enterprises. The objectives of the study were to; establish the relationship between credit management system and performance of private enterprises, evaluate the effectiveness of credit standards and screening process of credit applicants and to find out whether there are other factors affecting the performance of Tern Gumi. These objectives were achieved using purposive sampling together with convenience sampling of 40 respondents of which 30 responded. The research was based on primary data collected using questionnaires and interviews and secondary data from already written documents. The findings of the research were that a company allows a grace period of 30 days indicated by 80%(table6).80% agree that credit period extended to applicants is 30 days and 6.67% for cash discount(table7). In establishing the effectiveness of credit standards and the screening process of credit applicants,80% of the respondents indicated that credibility is used(table 8).100% revealed that there is an independent person responsible for screening credit applicants(tablelO).The researcher recommended that the company should introduce more cash discounts, seek financial assistance to increase company's scope and scale ofoperation. i