Why Cross-Reference Is Important

The lack of demand and the slackness in the market is driving partners up the

wall. Many partners have shut shop and several others would do so in the coming

days if the market does not show any immediate upturn.

The cash-flow has dried up and business pressure is forcing partners to

resort to unfair means to survive in a bad market. The result is that payments

have become hard to come by.

The market has begun working like a double-edged sword. Everyone is eager to

sell. But no one is sure when payments would come. These are times when partners

get hurt both ways: their business suffers if they don't sell; and, once the

selling is done, payment gets stuck for long periods. Often, there is the danger

that the payment will never come.

To

ensure payment, referring clients, especially the new ones, to friends and known

market circles, is a common practice among partners.

But the danger in sticking to only regular references is that there is no

guarantee that a client after honoring couple of cheques does not bounce the

next one.

Given this context, cross-reference becomes extremely important to avoid

losing payments all together or going in circles to receive cash.

How is the cross-reference done? A dealer in monitors should cross-check the

new client with a PC seller. A reseller in printers should refer the new client

to a dealer in networking products. A network integrator need to cross-check

with a peripherals partner.

There are two distinct advantages in cross-reference. One, there is no fear

of letting the name of the new client fall in the hands of a partner who is

selling similar products; second, the opposite party which is in a different

product category, does not have the market bias and hence can give a frank

opinion on the credit-worthiness of the new client.

Again, cross-reference with a single party could be dangerous. Tough times

demand tough measures and hence at least a couple of cross-references along with

a regular reference are a must before handing over the material to a new client.

Of course, cross-reference works on the premise of trust. And one needs to be

aware of those black sheep who could give the feedback saying that a particular

party is bad in payments. And, later sell the goods to the same party!

To avoid such happenings, it is better to do cross-reference among members of

an association. All major metros have associations which should revitalize the

role they play in securing payments of their members.

The other option partners have is to form cartels to safeguard payments. In

almost all cities, unofficially these cartels do exist which should be

strengthened further with mutual trust and transparency.

Be it cross-references or pressure from associations and cartels, partners

need to use every trick in the trade to remain afloat in these difficult times

sylvesterl@cmil.com