Fraudsters make millions
A current local news reveal that a fraudster company has purchased building material and auto oil from the main suppliers on credit worth millions and re-sold the same items in the market on lower prices on cash basis, thus making instant cash into their wallet which they utilized for their own purposes. This has been happening from many many long years in the country, without any pro-active counter measures. Though reactive legal measures are available yet those do not stop such fraudsters at the start of their operations. Foodstuff and other suppliers have also been victim of similar cheating worth millions. Local sponsors have also been loosing millions when their expatriate partner or manager creates huge unchecked credit purchases and then sell on cash basis against below the cost price, and finally one day runs away with no hope of returning.
While the companies and shopkeepers look for credit supplies, there is dire need of a "Credit Regulatory Authority (CRA)" who could register the suppliers and keep a check on the non payers in a timely manner. Ministry of Trade can easily put in place such a small regulatory office. The basic purpose of the office would be to keep an eye on the credit purchasers (shopkeepers and companies) and keep a check on their payments delay by a computer data. The suppliers would be bound to report their credit supplies exceeding Qar. one million on a monthly basis to the CRA and on the other hand the credit buyers would be bound to report their credit purchases and reason of delay on the credit. With this small measure, the CRA can take care of any unjustified delay on large amounts, probe them proactively and take suitable timely remedial actions.
Cash businesses are a few and the trade credit is unavoidable, it is a modern day fact. The CRA would also help salvage thousands of businesses who are acutely suffering from credit delays (unjustified) which is a wide spread disease of every 2nd business house in the country.
This is very true. There needs to be a system put in place to protect suppliers who sell on credit. There are companies who purchase on 30 days credit and do not pay for even six months.
There are examples of contractors who have made credit purchases from the local suppliers, used the material on their projects, received the payments from the projects and THEN diverted away the funds to make personal property purchases in the hope to make huge profits at the cost of creditor's funds. The creditors have been waiting for months and years in the hope that the company would receive the project funds (the companies always say that they did not receive the project payments yet, to their suppliers). This is also the core reason of delayed payments to their company workers. Therefore there is an urgent need of CRA to introduce fair business practices while the country marches head towards the progress in every segment.