Mumbai, Apr 5 (KNN) For the MSMEs reeling under enormous overdue payment, a new opportunity has emerged to at least express their grievances. CreditMonk an initiative by a few experts on credit, provides an online portal to suppliers to comment on their buyers.

At present all services on the portal are available free of cost. CreditMonk has captured basic data of almost all registered Companies and any one can register at the portal to find out the current payment delay period of any Company.

Anyone can also review the current payment status of any company and comment on the same.

KNN India spoke to Rajesh Dubey, a well-known financial expert and facilitator of CreditMonk to know more about the platform.

 

Q. Tell us everything about your venture, what does it do? What were the challenges you faced and how did you overcome them?

A business sells on credit and the credit is rarely paid on time. With late payments and non-payments at record highs its high time we made a business accountable to its suppliers and do something to ensure we get paid on time every time.

CreditMonk.com is a crowd-sourced, review-driven portal that rates payment habits of businesses that was launched in May 2016. Its main aim is to make credit a good word by enabling business owners to review and rate payment habits of businesses that they have dealt with. This makes companies publicly accountable and facilitates a foolproof way to assess a company's payment habit before dealing with them or extending them credit.  

Small businesses form 45% of India’s 2 trillion-dollar economy. 98% of these businesses reported giving credit and 97% businesses faced late payments. These are terrifying numbers. Instead of focusing on improving, innovating and managing the business, product or service, business owners often spend a majority of their time following-up on payments and fear not getting paid!

As an entrepreneur, I have personally faced major setbacks due to credit issues and now my goal is to help improve the problems faced by manufacturers, distributors and professionals alike. We spent years on setting up a great business, offering a good product and giving good service. But after spending considerable time and effort on trying to bag accounts with big companies as customers, we faced setbacks and lost a lot of rightful dues. There was no guarantee of payments, there was no way to get information on a company’s payment habit prior to doing business with them and no way to make them accountable or ensure others stopped giving them credit until they paid us. Businesses buy from one supplier, not pay and move on to the next one. And due to lack of transparency and no information on payment habits, everyone continues to supply to them.

 

Q. How do these businesses decide whether they want to give credit? How do they know if they will get paid? Currently there is no organized way besides maybe a few market references depending on your network.

Credit rating agencies cover less than 1% of the businesses in India and they are based on financial accounting documents that could give ability to pay but doesn’t give their intention to pay.

The issue is further plagued by:

·         Doctored financial documents

·         Poor companies, Rich owners

·         No easy legal recourse

·         No downside for customers who do not pay

·         Pay when I receive attitude

·         Reference / Intent to pay not known

·         Senior management not accessible / aware

So, yes there is no organized way for businesses to know whether they should allow credit and CreditMonk was launched to solve just this issue.

40% of respondents as per the Payments Barometer report on India said delayed payments were intentional. 2.2% of their receivables/topline is pretty much uncollectable and a lot more delayed. Business RUNS on credit and CreditMonk gives critical information to help decide whether to give credit or not.

On CreditMonk, the business that issues credit, reviews the creditworthiness of the company based on ground realities of whether they were paid on time, how the process to get payment was and if they have had any bad payment experiences with this company.

 

Q.   How has the journey been so far?

So far, we have got some amazing feedback. When we spoke to our accountants, they said they had this issue, when we spoke to our lawyers, they had this issue, all our colleagues in business had this issue and that’s the first reaction. That yes we have way too many unpaid invoices!

From people in the credit space and with any exposure to the B2B space, they love it. It brings a smile to their faces.

It is a satisfying experience to work towards a goal that you know will help a lot of people. CreditMonk combines something I faced personally with the booming tech space so it is fun and exciting. Who wouldn’t be when part of a journey that solves a 1 trillion-dollar issue?

 

Q.   What are the challenges you face?

We have the first mover advantage since we are the first website in the B2B space that tackles this payment issue. While there are websites to rate / review hotels and restaurants, movies, books, etc. there is no website currently to review the biggest issue for businesses today. What this means is we are starting to build awareness that now you have a way out - a solution to your credit problems.  Currently you ask someone what they do if they have late payments, and they look forlorn and say nothing…just follow up and wait. Now they can bring public accountability. Getting this message across is what we are working on now. The awareness about Creditmonk.com as a platform available for SMEs to provide information on their customers and seek information on their potential customers is still very low. Our challenge is to make maximum SMEs aware of this platform’s availability and make them use it. SMEs are so geographically spread across the country that a focused marketing plan also does not guarantee wide usage of this platform by SMEs. A more sustained effort of reaching out to SMEs is required which calls for committing time and financial support. We ourselves being an early stage company have limits on the financial resources that can be used for reaching out to maximum number of SMEs and creating awareness for this platform. 

 

Q.   What have been the revenue, the traction and the growth from the date of inception till now?

We have a database of 16 lakh companies; missing companies can be easily added. We started operations in May 2016 and have reviews added daily for larger and smaller businesses. From payment values / default of Rs. 50,000 to Rs. 25 Lakhs. We hope to grow month on month at over 30% and focus on our tie-ups to build awareness. The Indian economy is over $2 trillion. About 50% is attributed to the B2B space covered by SMEs and MSMEs. This business runs on Credit. 98% of B2B reported giving credit and 97% reported late payments, nearly 40% reported intentional payment delays. The numbers itself gives a perspective on the scale of business operations. However, as mentioned earlier, creating awareness and making SMEs use it remains be biggest challenge and constraint in our monetization plan.

 

Q.   What is the one thing that sets you apart from your competitors and what's your revenue model?

We are the only website globally giving you information on the market reputation of a business with a focus on “intention to pay” and not just “ability to pay”.

Our competitors so to speak could be the credit rating agencies. They cover less than 1% of the businesses in India. Further they are based on financial documents, which could be incomplete and biased. CreditMonk, however is the real on ground reality of the business in a transparent way and gives information that every business in India can really use to make a credit decision. We shift the credit graph for businesses from ‘opaque and helpless’ to ‘transparent and actionable.’

 

Q.   How does the website works?

It is a really simple process. You sign up for free – find the companies you have worked with and review their credit behavior. You review them on - How their overall payment habit was, what credit you usually offer them, what your terms are, have you declared them as a bad debt ever, were the senior management approachable etc. Click submit and it’s done.

It takes less than a minute to add a company that’s not listed on the website and you can review them immediately after. Reviewing them will make businesses publicly accountable and will make companies take heed of the feedback on their payment habit.

As reviews build up, you can the check payment habits of business and the company history on their intention to pay on our website and decide your terms with them before you enter the big black hole of late payments and bad debt.

As a company owner, you can claim your company’s profile on CreditMonk, reply to reviews, take negative reviews as positive feedback and eventually enjoy better credit facilities if you are a good paymaster.

 

Q.   What are your future plans?

The government has various initiatives to promote business in India. We aim to be an integral part of making business in India easier and more productive. Majority of the problems reported by companies affecting their profitability were to do with cash flow and late payments. In 5 years we would like to make CreditMonk a global shared information network that is the primary source of reviews on the payment practices and work culture of businesses to ensure credit can be given freely and without undue stress.

We want CreditMonk to cover all business sectors in India. Most travelers give as much or more weightage to a TripAdvisor rating than a another official body rating as that’s on ground reality by real users, not associations, and CreditMonk is exactly that for payment habits for businesses.

We believe that building awareness is key now, it is the path to covering the 5.7 crore businesses in India. We are focusing on various avenues including digital marketing and business and tech influencers to spread the word.

We have had interest from other countries and they say this is a global issue in many developed and emerging economies. So there are a lot of plans for the future to help make credit a good word. (KNN Bureau)