ABSTRACT Credit management is one of the most important activities in any company and cannot be overlooked by any economic enterprise engaged in credit irrespective of its business nature. Effective credit management is a prerequisite for a financial institution's stability and continuing profitability, while deteriorating credit quality is the most frequent cause of poor financial performance and condition. As with any financial institution, the biggest risk in microfinance is lending money and not getting it back. The study sought to determine the effect of credit management on the financial performance of Microfinance Institutions in Uganda. The study adopted a descriptive survey design. The population of study consisted of 59 employees and customers of pride microfinance in Uganda. A census study was used to carry out the research. Primary data were collected using questionnaires where all the issues on the questionnaire were addressed. Descriptive statistics was used to analyze data. Furthermore, descriptions wer.e made basing on the results of the tables. The study found out that client appraisal; credit risk control and collection policy had effect on financial perf01mance of MFis Uganda. The study established that there is strong relationship between financial performance of MFis and client appraisal, credit risk control and collection policy. The study had established that client appraisal, credit risk control and collection policy significantly influence financial performance of MFis in Uganda. Collection policy was found to have a higher effect on financial performance and that a stringent policy was more effective in debt recovery than a lenient policy. The study recommends that MFis should enhance their collection policy by adapting a more stringent policy to a lenient policy.
