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Confed steps up to safeguard dealer accounts

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CIOL Bureau
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CHENNAI, INDIA: After a number of channel partners fell prey to misuse of dealer accounts at various disti offices across India Confed-ITA has drawn up measures to ensure such incidents do not happen with its members in future.

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The IT body has requests all distributors to implement the suggested steps to avoid misuse of any dealer accounts for billing to third parties and the malpractice of diverting material without the knowledge of the dealer.

Confed-ITA has received numerous complaints of misuse of dealer accounts from locations like Madurai and Coimbatore. All members have been urged to obtain the statement of accounts from their vendors and distributors for the years 2007 and 2008 and verify the transactions.

As per the measures drawn up by the association distributors must train their staff and audit teams to monitor the status of every dealer account and fix appropriate credit limits. Distis should send automated statement of accounts to all registered dealers at the end of each month from their system. If a dealer account is not operated for a long period, say two months, then that particular account’s credit limit should become automatically zero, and if the dealer wants to bill then the disti branch has to get the credit freeze lifted from their credit department who in turn will consult the respective dealer so that all transacting partners are informed and alerted.

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Before submitting the security cheque, the disti should demand payment from the dealer by sending a written communication along with a statement of account. Only if the dealer does not clear the balance or respond to the correspondence can the security cheque be presented.

The credit limit of the dealers should be fixed based on their last six months average turnover and any higher limit is required for a particular transaction, then the credit department and the dealer should interact and a temporary credit limit can be permitted which does not become the standard limit for that dealer.

Cautioning partners, Confed said that the extra and unauthorized sales entries and their matching payments which are found in dealer statements, even though not belonging to them, can get them into problems with sales tax and income tax authorities. Hence, following the steps can help a dealer steer clear of such incidents.

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