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Channel condemns heavy-handed distributor tactics

Resellers on Computer Street in Dubai claim that heavy-handed credit collection techniques from distributors could exacerbate the financial crisis that has gripped the local channel.

Resellers on Computer Street in Dubai claim that heavy-handed credit collection techniques from distributors could exacerbate the financial crisis that has gripped the local channel.

Some distributors, worried by the recent spate or bad debts that resulted from major resellers leaving the market, have started exerting significant pressure on customers to pay up immediately — without taking into consideration the fragile state of the market or the long trading history and trustworthiness of specific resellers.

Dubai-based reseller Al Misk claims that one distributor has already been to its premises demanding payment in an aggressive manner. “A representative from the distributor turned up and started demanding payment,” said a spokesperson at Al Misk. “We have every intention of paying this distributor and have done so consistently in the past with post-dated cheques.”

With the market still in a state of shock, distributors with outstanding credit need to show patience and understanding in order to work through the current issues in a structured way and ensure that overall market losses are kept to a minimum.

“The person was too aggressive and was saying that we either hand over a cheque or he would take away the stock,” the spokesperson added. “I explained the market situation and told the distributor that we had no intention of not paying, but these people need to understand that resellers need time given the current market conditions. It is out of order for a distributor to do this sort of thing.”

Company owner Jamil Ahmed, added: “We have the payment and will make it. I just do not understand why this distributor decided to do it. We have spent ten years building up our reputation in the market and this sort of unwarranted action from a distributor can destroy it. I plan to make a report to the Chamber of Commerce and we are also considering talking to the police about this incident. The distributor representative had no right talking to one of our female employees in that way.”

While distributors are undoubtedly under intense pressure to minimise their credit exposure, tightening the screws on resellers too quickly will only serve to exacerbate the problems and lead to more companies shutting up shop overnight.

The boss of one major regional distributor explained: “The distribution community needs to look at the situation sensibly and calmly and reduce their credit exposure gradually over a number of weeks. If everyone goes in hard, these resellers will be forced to close and the overall losses suffered by the distributor community will be much greater.”

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