Abstract: The purpose of this study was to assess the effect of debtors management on the financial performance of selected microfinance institutions (MFIs) at Nairobi County in Kenya. The independent variables for debtors management were: debt collection policy, internal control systems, client appraisal and legal framework. On the other hand, the dependent variable was financial performance of selected MFIs at Nairobi County in Kenya. Primary data was collected by the aid of self administered questionnaires and analyzed using multiple regression analysis. Both descriptive statistics and inferential statistics were determined. The nine licensed MFIs in Nairobi City, Kenya by the CBK as at 31st December 2014 were the target population of the Study. In each of the 9 MFIs, four individuals were purposively selected to participate in the study as respondents; these were the Branch Manager, Credit Officer, Debt Recovery Officer, and Finance Officer and hence the sample size was 36 Officers in the 9 MFIs. With the aid of SPSS version 21.0 and Excel software, quantitative results were tabulated and presented in the form of charts, bar graphs, and narratives.