Dubai channel lauds Al Etihad Credit Bureau creation

New credit bureau to assess individual and corporate credit-worthiness

Tags: ASBIS Middle EastAptec DistributionDubai Computer Group (DCG) ( HermesMerlin Digital
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Dubai channel lauds Al Etihad Credit Bureau creation Dr Baghdadi says the new credit bureau is a positive step for the business community in the UAE.
By  Manda Banda Published  July 7, 2014

While reseller runaways have been a perennial challenge in the Dubai channel, industry experts say the formation of a credit bureau is only the beginning of a process that will help in curbing careless lending on the part of vendors and distributors, and excessive borrowing from resellers.

Euler Hermes' Bolourchi said unfortunately, a credit bureau alone will not influence directly the end of reseller runaway cases in UAE. "The main reason for such acts is because of tight liquidity, cash flow problems, negative working capital or simply fraud," he said. Therefore, Bolourchi added that Euler Hermes will continue to provide its clients and the whole IT industry in the region with insurance coverage and required knowledge in order to monitor payment records and mitigate risk.

Baghdadi agreed and said there are no guarantees in terms of reseller runaways, but the establishment of the bureau will go a long way in minimising the menace in the channel. "Most customer runaways are due to lack of working capital, dependence on vendor and distributor credit lines and bad cash flow management. There are many resellers in the market whose annual financial statements are not satisfactory," Baghdadi observed.

DCG's Bachani added: "I don't think it [credit bureau] will spell an end to reseller runaways as those who have criminal intent to runaway have always found ways to dupe people."

He explained that there is no substitute for good business conduct and businesses shouldn't offer too much credit to an individual customer. "Experience plays a big part and the credit bureau will help limit the occurrence of reseller runaways in the local market," he said.

Bachani reiterated that resellers that maintain good accounts and were previously not able to get decent credit terms from distributors, will get rewarded for their good behaviour by having respectable credit ratings and have more access to finance, which will also be a big boost for the local market.


1861 days ago

Credit bureau is in no way going to reduce "runaways", as this is not going to be a free service and can be afforded by only companies working at a certain level. It may definitely help those companies to get a Bank loan etc.

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