NICA urges Nigerian manufacturers to professionalize trade credit management

The National Institute of Credit Administration (NICA) has advised Nigerian manufacturers to professionalize their trade credit management to protect cash flow and sustain industrial production. According to NICA Registrar/CEO Chris Onalo, trade credit accounts for more than 60 per cent of working capital financing within Nigeria’s real sector.

While credit extended to distributors can drive sales and market expansion, NICA warned that poorly managed lending could lead to bad debts, cash-flow crises, and factory closures. The institute urged companies to view trade credit as a strategic commercial tool rather than a mere concession to distributors.

To mitigate risks, NICA recommended several best practices, including conducting thorough due diligence, establishing strict credit limits, documenting transaction terms, and regularly monitoring receivables. The institute also encouraged the use of trained, NICA-certified credit management professionals and the adoption of credit factoring to improve liquidity. Additionally, manufacturers were advised to report distributor credit histories to licensed credit bureaus to help identify risk patterns and reward reliable distributors with better access to finance.