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