Examining the interplay dynamics of business profile, credit risk management practices, problems encountered in CRM, and financial performance of the sari-sari store in Laoag City

Abstract

This study assessed the credit risk management practices and its effect on the financial performance of sari-sari stores in Laoag City, Ilocos Norte, Philippines. Adopting a quantitative descriptive-correlational research design, the investigation focused on registered store owners operational for at least two years, utilizing data derived from a computed sample size of 310, based on the total population of 1,351 registered stores. Data were systematically gathered through a four-part survey questionnaire developed and adapted from related literature and translated into Iloko which collected information on store profile, CRM practices, and the financial performance indicators of sales, profitability, and accounts receivable turnover. Data were analyzed using frequency and percentage, weighted mean, Spearman’s rho, and Pearson r.

Results showed that CRM was practiced to a moderate extent, yet owners experienced slightly serious problems, especially in collection strategies, followed by credit policies and record-keeping practices Financial performance was found to be moderate, with slow accounts receivable turnover. Spearman’s rho analysis indicated that store profile variables were not significantly related to extent of CRM practices, although some profile factors, were partially associated with level of financial performance. Pearson correlation showed that the extent of CRM practices was not significantly related to either the seriousness of problems encountered or overall financial performance. However, the degree of seriousness of specific CRM problems encountered had a partial influence on accounts receivable turnover, while other financial indicators were unaffected.

The study concluded that, while sari-sari store owners in Laoag City generally practice credit risk management to a moderate to high extent, these practices do not significantly influence their financial performance. This suggests that credit decisions among micro-retailers remain largely informal and trust-based rather than guided by structured systems. It recommended the adoption of clearer credit policies and the gradual integration of digital record-keeping tools to strengthen credit management efficiency.