East African Cables #ticker:CABL has provided Sh705.7 million to write off part of its bad debt, with the company moving to stop sales on credit, which has seen it lose hundreds of millions of shillings through customer defaults.
Impairment of trade receivables is among the major causes of the company’s losses in recent years. EA Cables wrote off Sh248.2 million of the bad debt in the year ended December compared to Sh329 million a year earlier.
The stock of doubtful sales dropped to Sh1.1 billion to Sh1.6 billion in the same period, net of provisions.
The Nairobi Securities Exchange-listed firm has made a further allowance for impairment of trade receivables of Sh705.7 million in what is seen as anticipation of further defaults, according to its latest annual report.
EA Cables has, however, moved to stop new sales from going bad.
“On receivables, the group has revised its trading terms to cash or near cash thereby reducing its average collection period and has also taken severe measures to recover delinquent debts,” the company said in the report.
“The group has obtained favourable court decrees to recover a total of Sh372 million from defaulting customers and recovery efforts are in place.”
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