Sub-distis extend credit period

New Delhi:  The past few months have seen the impact
of the downturn on the channel fraternity. With no liquidity in the
market, cases of payment defaults were on the rise. Sub-distributors on
their part have come up with a strategy to address the issue and have
announced that they will be stretching their credit limit from 20 to 40
days. The change in policy would have an impact on the business returns
of sub-distributors. On the other hand, while national distributors are
not planning to apply the same policy, they are in fact planning to
further squeeze the credit period in order to churn out payments from
sub-distributors in a short time.

Manish Mehrotra of Allahabad-based Tritech Enterprises
informed that the market has been very slow in the last few months.
"Despite the fear of credit crunch in the market, sub-distributors have
extended their credit limit from 20 to 40 days. This way, we will be
facing the brunt of delayed payments. Unfortunately national
distributors are not applying the same policy, in fact they will
shortly squeeze the credit period further."

A New Delhi-based sub-disti, Swarajya Gupta of Digitronics
Infosolutions has also extended its credit period from 20 to 40 days.
But, there are a few sub-distributors in the market who are sticking to
their current policies and have no intention of modify it in view of
the slowdown.

Rakesh Jain of Chennai-based Supreme Computers informed that
though there is a slowdown and sub-distributors are facing difficulties
in collecting payments, his company had not extended its credit period.
"Corporate customers often make delays in payments to channel and in
turn it becomes difficult for the channel partners to repay
sub-distributors. However, we will not be extending our credit period.
It will remain 25 days."

Sharing his thought about the credit policy, Vishak Raman of
Fortinet said, "In light of the current slowdown and the subsequent
liquidity crunch that it has brought on partners, Fortinet is
considering working on ways to help its channel. It will negotiate with
its distributors to ease the credit terms for some of its partners when
the customer delays payments. "Based on the channel's performance and
credit worthiness, we can work with the distributor to extend the
credit limit and time for our 28 partners, on selective case-to-case
basis," said Raman.

National distributors like Ingram Micro and Redington are
still following a 15 to 20 day credit period policy and there are no
plans in future to extend it, to utilize it as a tool to fight
recession. Rather, they are planning to shorten the credit period so
that the process of cash collection is quick and stringent.

Kamini Talwar, Director, Iris Computers informed that the
credit period of Iris is 30 days and the company does not intend to
make any modifications to its policy with respect to slowdown.

A few sub-distributors also opined that they would shortly
squeeze the credit period which would eventually mark the elimination
of low strata dealers from the market. This would ensure the survival
of only potential dealers and higher margins.

Sharad Khandelwal of Mumbai-based Kay Kay Overseas informed
that their current credit period is 30 days and the decision to squeeze
it or extend it would depend on the economic situation in future.