Working Capital Management And Performance Of Public Service Vehicles Insurance Companies In Kenya

ABSTRACT

The study examined the impact on the performance of insurance companies in Kenya using

working capital management practices. The allocation of work assets is of major importance to

the success of the organization. A moderate and vigorous style of working capital administration

can be embraced by an organization. If working capital is poorly managed, funds are

inappropriately linked to idle assets that lower the corporation's liquidity and vice versa.

Efficiency in the allocation of job assets thus impacts not only short-term sales financial

performance, but also long-term financial performance. The overall goal of this report was to

evaluate the effect of working-capital management on the quality of Public Service Vehicle

insurance undertakings, with specific objectives; examine the influence on the accomplishments

of Public Service insurance undertakings in cash management practices; and measure the impact

on the performance. A Causal research design was used. The research took place in the city of

Nairobi at the offices of Amaco, Invesco, Direct Line and Explico, respectively. The target

audience composed of 62 voters, consisting of four financial managers and 32 insurance

companies, 17 accountants and 9 internal auditors. The scientist used a stratified random

sampling technique utilizing Yamane's (2009) with a sample size of 51 respondents. Both

Primary data and secondary data was collected using questionnaires and data collection

schedules and presented by tables . Descriptive statistics and inferential statistics were used to

analyse collected data. Results showed that there was a positive relationship between the

influence of cash management, accounts receivable management and accounts payable on PSVs

insurance companies performance. This means that cash, accounts receivable and accounts

payable management are determinants of working capital. From the regression model, (R2 =

.829) shows that all the predictors account for (84.2%) variation in performance of Public

Service insurance companies. The study showed a positive relationship between working capital

management and performance of the Public Service Vehicle insurance companies. The study

thus recommends that for PSVs insurance companies to improve performance they should adopt

a cash and carry model for premium payments and invest in fraud claim prevention to control

their accounts payables.