By tracking credit histories, DebtorsWatch is helping Companies to recover money owned. As the old saying goes, a rupee saved is better than a rupee earned, but this says nothing about a rupee returned. Businesses are making it a point to discover new methods of recovering money they are owed, and becoming profitable from the effort.
One of those new ways is the website www.debtorswatch.com, established early this year, which tracks the credit histories of businesses.
Business enters details of defaulting clients, to build up a watch-list of bad payers. There are no tools available for accessing the books of new clients, which makes the risks greater for SME’s as a single bad debt experience can cripple you.” But how can a small business analyze client’s books to establish if they will pay on time, or indeed at all? Trade references are invariably flawed, reflecting only the positive nature of a company.
However, the reality is that “you don’t get much time or information on your own, and gut feel seems to make the end decision”. Credit history, on the other hand, i.e. whether the company has been a bad payer previously – provides a good indication of the client’s credit risk.
One way out of this difficulty is DebtorsWatch. The site launched in Mar17 with the aim of creating a transparent service for SMEs to register businesses defaulting on their debts.
“There had to be more accountability,” founder Deepanjan Periwal says, “and businesses needed the ability to view possible defaulters and register past offenders”
Deepanjan says that the “experience of running small service firm showed a flow-on effect from bad debt and highlighted the fact that SMEs needed better communication and assistance in debt servicing than companies at the big end of town”.
The site is a simple concept. Registered members log on and request any information on the company they are interested in doing businesses with. Any reference posted by other members in regard to payment history are compiled and available for viewing, “allowing informed decisions to be made”.
By his own admission, Deepanjan acknowledges that the site relies on its members uploading information. Yet he insists that businesses are inclined to register defaults or tardiness, as their method of punishment. Indeed the threat of being registered by a member on the site remains one of its biggest strengths for ensuring payment. DebtorsWatch is not merely a blog, any default registered by a member is rigorously checked and a final opportunity of making payment in 21 days and documenting reasons for non-payment is given before the name get registered on the list of defaulters.
According to a trade credit insurer specialist, the eagerness of SMEs to obtain sales often prevents businesses from undertaking proper due diligence of new and old customers”.
Deepanjan says that just because a company has paid on time previously does not mean that it will not default. In the future. Companies must ensure that they are aware of any changes within their client that might affect its credit worthiness.
The success of DebtorsWatch relies on dominating industries,” Deepanjan says, “through talking to the different association and attempting to get their members on board, we strengthen those members in a community of protection.”
This system is effective, as the chances of obtaining information from the site about relevant client’s increases with every additional member in the industry. In addition to individual debtor’s profiles, DebtorsWatch is accumulating overall statistics for defaults in different industries.
With access to credit information about their customers online, anytime, anywhere, businesses now can make more informed decisions before giving any credit. To find out more, visit www.debtorswatch.com and watch the video on how it works.
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