4 C Principles of Art of Money Collection

OUTLINE


Business survives on flow of orders and money. Both these functions are so important that it gives umbrella on all other functions. To establish a business, product is to be identified in line with the background of the entrepreneur and then to market the product either to the mass market or to the niche. After marketing is established, hard core sales is to be materialized and then collection of sales proceeds or money collection management is to be monitored very religiously. Any lacuna in this activity will dig a pot hole to the existence of the business for the longer run.

After a great deal of research, I have found the concept of 4 C of money collection management is nothing but a combination of both arts and science. I strongly vouch that 4 C principle as a part of money collection management should be, by all means, monitored by top management personnel namely CEO/CFO, no matter what big the company it is. 4C’s are CARING, CLEVERNESS, CONTINUITY & COOLNESS.
Companies who are strong & financially sound years after years, definitely this activity is closely watched and monitored by this level of personnel only.












4 C PRINCIPLES OF ART OF MONEY COLLECTION
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One can expand business beyond expectation but money management is to be articulated in such a fashion that business does not suffer. Precisely that is the reason money spent and money collection are to be always balanced to the extent possible for good health of the business. This can be achieved in 4 simple steps.

Any business encompasses various activities important of those are product marketing, procurement of raw materials / bought out components, producing, human resources managing, finance, house-keeping, debtor / creditor management. The majority of these activities are further narrowed down to selling the products and collection of proceeds (money) evolved from sales transaction. This collection art is a skill generally developed after practicing “4C” management principles. From my experience of past three decades in the line of sales recovery management, I have closely monitored this function in all my employment because if this activity gets lacking, business of the company can suffer miserably and even collapse.

I use to teach and preach my colleagues that “no one should enjoy other’s money unnecessarily”. If my company supply produced goods to our customer on a term of 30 days of realization period, they should be in a position to effect the payment within 30 days + 7 days grace period. Beyond that period, if the payment is not made then the customer in question is enjoying our money. Here comes the “art of collection”.
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To my mind, when I do analyze this collection of money management, I find the combination of 4C principles are very useful. Chronologically, they are CARING, CLEVERNESS, CONTINUITY, COOLNESS.

Caring : During follow up, I make feel my customers that I care for them, they may be having genuine problem and in the process of written letters / personal representations, I always appreciate their not able to make payment. By way of doing this, I also explain them about the awkward position that I will face if the payment is not forthcoming.

Cleverness : While following up, very cleverly and tactfully, I used to find out about the customer’s ingenuity. This is very important exercise because many a time the smell of foul play can be traced if non payment issue lingers beyond the grace period and if not handled with cleverness on the seller’s part; it may lead to serious consequences on part of business health. It is a big experiment and by cleverness, one has to verify about his customer’s ability from all round the corners sometimes by befriendly with customer’s employees to know the real reason of not making payment. Here one thing is to be made very clear that no procrastination technique is to be adopted as in that case, customer can become suspicious and instead of making payment, he will start finding excuses.

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Continuity : Most of the time, I have seen that we miss continuity. This money collection activity is a very painful exercise. It is to be monitored on regular basis and above exercise are to be performed periodically namely on daily basis, weekly basis depending on the nature of the payment and amount involved therein.

Coolness : All of the above activities are to be performed with tremendous degree of coolness. At any given point of time while dealing with collection of money management issue, if coolness is getting dampened then the entire thing will be out of control. Instead of getting payment, the chances of involvement with skirmish will emerge.

From my personal experience, I find that most of the time customers effect payment after a round of 4/5 follow ups barring some exceptional cases where customers are in financial doldrums. Of course, a minor percentage of two or three trouble creator will be always to be handled with utmost care exercising above principles at great length.


I exercised these principles from the beginning of my career, now of course with every passing day, skill is being honed and utilize them for follow up to the highest echelon of customers. I still remember when I was working in a Bangalore (South India) based valve manufacturing company, we were not getting payment for a period of more than 90 days from a
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reputed company locally situated. I started to follow up with a visit and then a letter with very caring words to their operating level personnel. Next letter was addressed to their middle management personnel with clever deployment of words. No result was achieved. I persuaded the matter to their VP level and after a month passed, we got the payment with apology letter from their materials manager. But all through this period of agony, I maintained my coolness.

When I was running my own company, by the name Annie Equipments Private Limited, I was engaged in the trading of screw pumps and used to supply to big chemical plants, mostly in the niche market of Gujarat and Maharashtra of India . In January 1998, my company supplied spares for some other make of screw pumps identical to the one manufactured by Annie Equipment’s principle who was situated at Kanpur, Northern part of India, to a very big reputed chemical company situated at BARODA, Gujarat, India. After supply of the spares duly inspected by customer’s inspecting authority, GRN (Goods Receipt Note) was made to effect the payment. Payment was to be effected within 45 days from GRN but even after my follow up, it was not getting materialized and in this process, nearly nine months were elapsed. I was getting restless because it was not a small amount. When most of my principles of money collection management which I used to use in my employment, failed to achieve the
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desired result in this particular case, I was mortified. Nevertheless, I maintained coolness and made visit to the head of material management of the customer but to my dismay, I found that he wanted to avoid me. After a long persuasion, he met me and started to waffle without touching the main issue of clearance of dues. With utter frustration, I came back to my office, I started to chalk out suitable strategy and drafted a small letter with use of all cleverly crafted soothing words to the managing director of the company with last para saying “I, very submissively, very humbly request your personal intervention in this matter and would you be kind enough to ensure payment of Rs. 10 lacs and save a small businessman with entrepreneurial ability”. Within 24 hours of their receipt of this letter of mine, secretary of managing director of the company personally came down to my office to hand over the cheque and with a request from M.D.’s office to meet him to start business afresh. It was a matter of use of words cleverly. And ultimately without losing my coolness, I managed to get the payment in the early part of the year 1999.


Now-a-days, of course I see other ways around the recovery agents of financial institutions – they simply believe on harshness. They adopt rowdism, hoolism to collect the payment which is not correct to it’s taste as far as business transaction is concerned. If the basics are clearly defined during sales transaction, then ultimate action for collection of money using
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rowdism is not at all envisaged. It is only feasible when the sales transaction is not worked out properly or made in haste just to achieve the sales target by the sales / franchise personnel.

Further, I observe that even we are able to follow these principles as over all guidelines, definitely targeted result will be achieved. Hence, I would like to assert that 4 P of marketing mix as per eminent marketing Guru Philip Kotler is well established and same is the case with 3V of value chain of marketing as per another marketing whizkid Nirmalya Kumar is well acclaimed, and my theory of this 4C for collection of money can be recognized on mass scale of course some statistical analysis supported by datas are to be put forward. I have utilized these 4 C principles in my day to day activities pertaining to money collection
management and get tremendous success.