Abstract
Purpose: The main objective of this study was to investigate the impact of fund transfer agencies to liquidity management of KPLC.Methodology: A descriptive case study research design was used. The population for the study included all the 82employees in the KPLC Mombasa Branch. A sample of 57 respondents was selected from the population using a stratified random sampling technique. A questionnaire was the preferred data collection instrument. The data was analyzed by use of descriptive statistics such as mean, mode and median.Results: The study findings showed that there was a gradual decline in the average collection period. This implied an improvement in the average collection period of KPLC Mombasa over the year 2002 to 2010. In addition, the number of fund transfer transaction increased over the study period. This implied that the fund transfer transactions may have impacted on the average collection period. Further, according to this study it was possible to infer that there was a gradual increase in the acid test ratio. This implied an improvement in the acid test ratio of KPLC Mombasa over the year 2002 to 2010. In addition, the number of fund transfer transaction increased over the study period. This implied that the fund transfer transactions may have impacted on the acid test ratio.Unique contribution to theory, practice and policy: The study recommended that KPLC should engage more fund transfer agents in facilitating bill payments. Specifically, KPLC should engage more banks, Saccos, western unions and mobile operators. This is because such an approach would improve the average collection period and acid test ratio further.The study was purely descriptive; it therefore lacks the statistical rigor that would establish causation between fund transfer agencies and average collection period as well as the acid test ratio. Therefore, the study recommends a regression analysis to establish causation between dependent and independent variables.
Highlights
Fund transfer agencies are firms that are contracted by utility firms to facilitate cash collections with an aim of improving the cash management for the contracting company
This implied an improvement in the average collection period of Kenya Power and Lightning Company (KPLC) Mombasa over the year 2002 to 2010
The number of fund transfer transaction increased over the study period
Summary
Fund transfer agencies are firms that are contracted by utility firms to facilitate cash collections with an aim of improving the cash management for the contracting company. The idea of utility firms entering into strategic relationships with fund transfer agencies stems from the realization that utility firms can reduce the time float between collection and banking of the customer payments. Fund transfer agencies eliminate the long queues witnessed in the head office of the utility firm. The aim of fund transfer agencies does not differ from what firms have in mind when instituting cash management systems such as lock box systems and concentrated banking. Fund transfer agencies include banks, post offices, Saccos, western union, money gram. The most commonly used transfer agency is the Bank. Cooperative Bank, Equity bank, Housing Finance, National Bank are among the banks that have entered into a strategic relationship with firms such as Kenya Revenue Authority(KRA), primary and secondary schools, universities, colleges, insurance companies, utility companies
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