Ingram adopts credit against comfort cheque practice, resellers unwilling to comply

Credit has always been a critical instrument in continuous business
engagements. However, it is a sensitive issue for both vendors/distributors and
channel partners, as any bad debt would directly reflect into the company's
profits and even its existence, subject to the amount of risk taken. To strike a
balance between-credit and safe-business, recently, distribution major Ingram
Micro initiated a drive to collect a set of 'duly signed blank cheque leaves'
(called 'comfort cheques') from its channel partners.

Though the 'comfort cheque' concept is not new to the resellers in
business, a section of resellers is upset that Ingram Micro is adopting many of
the Tech Pac practices post Ingram-Tech Pac merger, as K Jaishankar (from Tech
Pac) is at the helm of the merged entity. They stated that in the past they had
stopped doing business with Tech Pac because they were not comfortable with the
said practice.

When asked about the comfort cheque practice, Jaishankar, Managing Director
of Ingram Micro India said, "During the merger, the management has agreed
upon to adopt and implement best practices of both the companies, to make the
whole system more effective and to provide better service in the business. We
have introduced this concept successfully during Tech Pac days, and our
customers (resellers) were also happy with it, since we were able to offer
better service to them. Now, we are trying to do the same here and are confident
of convincing our customers, making them understand the whole process in order
to provide better and effective service in business."

K JAISHANKAR Confident of convincing customers about the whole 'comfort cheque' process to provide better and effective service in business

Leading distribution companies, usually, prefer to collect duly signed blank
cheque leaves from the dealers so that when an order is placed by the reseller
over phone, the distributor fills up the required amount in the given cheque
leaf against that order and release the stock immediately. This practice ensures
smooth functioning, quick delivery of goods/services, secure payments and so on.
But, the fact remains - errors are bound to happen. There have been instances
of filling-in the wrong figure in cheque leaf and presenting two cheque leaves
against a single order. Errors like these are a cause to concern for the channel
community. In fact, only a handful of channel partners, essentially comprising
leading players, follow the practice of furnishing a set of duly signed blank
cheque leaves to the distributors. Greater majority prefers to issue cheques as
and when the order is placed.

"We have had enough problems by giving duly signed blank cheques to the
distributors and now, we are not entertaining it. It is up to the distributor to
continue business with us. We would not comply with the new rule of Ingram
Micro," said Yaspal S Jain, Director of Devraj Computers.

Voicing a similar opinion, Sajan Kankaria, Director of Kankaria Computer
Links said, "With Tech Pac, we faced this problem and had to take back our
cheque leaves after one such incidence. This time, we have clearly communicated
that we would not comply with the new rule of Ingram Micro. The company policy
should be in the good interest of all and ensure smooth functioning of
business."

The same sentiment runs through the market. MC Jain, CEO of Mahavir Computer
Spares said, "What is the guarantee that distributors would not make any
mistake with the cheques? It is better to avoid such practices in business, than
get into the problem and then crib about it. Resellers should collectively
refuse to comply with the new system."

Meanwhile, leading players such as Delta Peripherals and Supreme Computers
are considering complying with the new rule of Ingram Micro. "We have
decided to provide the 'comfort cheques' for smooth and effective
functioning of business. I agree that some mistakes do happen at the
distributors' end but it can be sorted out. Moreover, they need you because
you are a valuable customer to them," said Kamal Sethia of Delta
Peripherals.

"Distributors should have a fool-proof system to avoid such issues and
bring-in confidence among the resellers. If errors are avoided, 'comfort
cheques' is a best option in business," said A Rakesh Jain, Director,
Supreme Computers.

S Gopikrishna & Sunitha Natti