Goan Partners Slug Out Security Cheque Issue With Distributors

Partners in Goa vocife­rously voiced their protest about having to furnish a
security cheque to national distributors-a practice that they claimed was
illegal-at The DQ Week IT Panchayat held in the city on February 28, 2009.
National distributors usually ask partners to deposit post-dated cheques (PDC)
with them for transactions. Additionally, they also ask for blank cheques as
security cheques. Vishal Bhavsar of Redington, Terence Viegas of Ingram Micro,
GM Prabhudesai, President, Goa IT Business Association and Naresh Kumar of
Neoteric Infomatique were on the panel.

All the three distributor representatives from Neoteric Infomatique, Ingram
Micro and Redington claimed that they have till date never deposited the cheques.
But when asked by the moderator of the IT Panchayat, Vinita Bhatia, Executive
Editor, DQ Channels, on why was it needed in the first place, they claimed that
it was a company policy.

Terence Viegas, Branch Manager, Ingram Micro India said that this was a
company policy that has been in practice for several years. “Since we give
credit to the partner, we need some security from them, so in case a cheque is
dishonored we have the security cheque,” he claimed.

However, it is obvious that if a post-dated cheque was to be dishonored then
the security cheque would also follow suit. Sandeep Vaidya of Megatrends,
however, demanded to know why were the distributors were not willing to
acknowledge the receipt of this cheque. “If taking the security cheque is
company policy then why don't the distributors mention it in black and white,
and give documen­tation supporting this?” he questioned.

(l-r) Vishal Bhavsar of Redington, Terence Viegas of Ingram Micro, GM Prabhudesai, President, Goa IT Business Association and Naresh Kumar of Neoteric Infomatique were on the panel

Ejaz of Infotech Solutions also pointed out that giving a blank cheque as
security was a huge security risk. “If my liquidity is Rs 20 lakh and I give a
distributor a blank cheque, I am effectively giving them the power to take all
that funds from my account,” he said. Besides he added that when he had once
presented a cheque and mentioned that it was a security cheque on its back, the
distributor refused to accept it.

Another issue was that, who should take the responsibility in case the cheque
is misused. However, Viegas maintained that this was a business policy and it
was not a way to defraud a channel partner.

Prashant Kuncolienkar of Computronics Infotech noted that his cheques had
been misplaced and he had to keep following up with the distributor for over
three months before the case was resolved.

Vishal Bhavsar, Branch Manager, Redington India mentioned that his company
often used the security cheques while recording a transaction, but when the
transactional PDC is presented then the cheque number is changed in the system.
“We have never used the security cheque for actually charging a transaction till
date,” he reiterated.

GM Prabhudesai of Amey Computers and President of Goa IT Business Association
(GIBA) said, “As per the law, no company can ask you to surrender a blank cheque
as security for a business transaction.”

If distributors insist on taking security cheques, Ejaz suggested that they
should take it for the amount of the credit they extend to the partner rather
than take a blank financial instrument. This suggestion was met with a round of
applause. Partners moved on to to another issue that affected them sporadically
that of the MRP being printed on the box being much lower than the price at
which a dealer can sell to the customer, after factoring the distributor charge
and margin.

The Panchayat saw a lot of participation by all the channel members and
distributor repre­sen­tatives. The presentations were made by the sponsors of
the event-Symantec, Gigabyte and Emerson Power Networks.

Vinita Bhatia

vinitavs@cybermedia.co.in