Factors Affecting the Collection Efficiency of Ma-a Parish Multi-Purpose Cooperative: Basis for Policy Formulation

Ma-a Parish Multi-Purpose Cooperative (MPMPC) is mainly engaged in lending operations. As such, collection is integral in its operations. For MPMPC, the existing credit and collection policy and practices are ineffective. The ratio of their overdue accounts is escalating in the past years. In 2015, past due accounts already comprise 31.28% of the total loans granted. The primary purpose of the study is to recommend policies that will improve the collection efficiency of MPMPC. The study used participatory action research. It also used quantitative and qualitative research methods. Documentary analysis was done using the data available in the office of MPMPC. Then, we administered the survey questionnaire to the members. To validate the result in the survey, we conducted two Focus Group Discussions (FDG), one for the borrowers and another for the officers. The study concluded that several factors contribute to the collection inefficiency of MPMPC. These factors include inconsistency of sending collection letters, payment and spending priority of borrowers, mismatch of payment terms and schedule of payments between borrowers’ preference and cooperative practices, borrowers’ perception about penalties, borrowers paying habit, and lack of Cooperative Credit and Collection Policy Manual. The research findings and conclusions arrived at led to recommendations to the Board of Directors of MPMPC. These recommendations include conducting income generating project seminars, encourage young professionals to join the cooperative, ensure proper monitoring of the post-dated checks from borrowers, regularly send Statement of Accounts (SOA) to all borrowers, monitor the business of those who borrowed for business purposes, maximize the services of the collector, review the classification of loans and its respective terms of payment, formulate a credit and collection policy manual, and conduct continuing cooperative members’ education.