CREDIT & COLLECTION MANAGEMENT
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Credit & Collection Management
Reviewed by Mr. Ashok Sharma, BMA President (1991-92), International Federation of Purchasing and Supply Management, Vienna (1991-93)
Non-Fiction
Publisher: VIVA Books Private Limited, Delhi
Price: INR 895.
Managing debtors is a very crucial activity for business organization. No business can afford to keep their cash-flow unhealthy ie if they fail to manage debtors and creditors well. To avoid your own money draining out of business due to a bad credit & collection system or your not selecting credit-worthy customers locks up your own precious money. In fact, collection assumes a critical role in today’s sluggish economy.
Now here is a book written by executive – scholar Mr. Ajoy K Guha titled “Credit & Collection Management”, subtitled ‘Collect your dues and over dues without losing customers’. (earlier titled “Cash before you Crash” which went into 4th edition). As a good professional, he has not only himself done a good job of credit and collection management while serving various corporates, but also decided to share his vast knowledge and practical wisdom.
It is “a complete manual on credit and accounts receivable operations in EDI, Supply Chain and in ERP environment”.
The book starts with 10 principles of Credit & Collection, gives a complete idea on what is being covered in the book. They are:
1. A Sale is complete only when the last paisa is collected/ adjusted on agreed time. (That includes GST, bank guarantees, tax-deducted-at-source, etc.)
2. Money due from customers: If you don’t ask, you don’t get.
3. You should be able to collect your money and retain the customer as well. And that is not difficult. Stand by your commitments.
4. Debtor – the older it gets the more difficult it is to collect, and we have less energy to follow-up for its recovery.
5. Don’t over commit. Deliver what you promised – which means delivering every clause from the acknowledged-order.
6. In an organization collecting money is everybody’s business. Let all work be client centered.
7. Choose your Customer carefully. Get rid of the dead-beat customers. In this era of paper-thin margins, you can’t build a healthy organization on sick, weak & indifferent customers.
8. Focus on Customer Complaints and Sundry debtors.
9. Delight the customers. Consistently give excellent service & become their weakness. Make him need you. Interest him to do business with you always. Interest and fear of losing you will keep you together.
10. Compete on benefits, advantages, features, service, value proposition, market share, uniqueness, technology, innovation, when exception - on price & discount, etc. but, don’t compete on credit. Chances are it may make your organization very weak.
The book deals with all types of customers including government departments and how to effectively follow-up with them.
Contains 17 Chapters and 3 annexures exhaustively describing the subject in the Indian context. The chapters are:
Organizing Credit & collection department, the winning team – collecting money is everybody’s business, terms of payment, credit verification, order acceptance & control, receivable accounting, payment methods, sales administration, collection planning based on Pareto principle, Management information systems, Debtors Audit, Focus on Service industry, Bank guarantees & Transit Insurance.
Highlights, the ‘five reasons why customers don’t pay and how to tackle them’. Three Chapters describes solution to due & over-due problems – the day to day collection, the difficult ones and how to take legal action,
Discussion on ‘Step-by-step approach to collecting Over-dues’ and on ‘Cash traps in Contract’ makes it worth reading.
Author Ajoy K Guha (Life Member of BMA), whom I know for many years, last served as Executive Director (Business Development) with Renoir consulting – UK and now is an independent management consultant. He has earlier served various industries for 40 years: to name few Arya Communication Ltd. (Motorola), General Electric Alstom Ltd., Aplab Limited, Bright Brothers Limited, etc. He has also served in the Middle-East. His two-days seminars ‘Cash before you crash’ and on various other subjects have been widely appreciated.
In summary, I recommend this book a must for every business organization to keep their cash flow & net-profit healthy. It is targeted towards Corporate heads and managers in Sales, Marketing, Commercial, Finance etc. Written in simple language for all types of businesses from MSMEs to large corporates, the ideas contained in the book are practical & implementable.
‘The Hindu’ newspaper said in one of its reviews “Read Before You Crash”. I recommend you do too.