Enhanced client scrutiny by vendors

In my earlier post “It vendors facing pricing pressure”, I had highlighted the increasing vendor scrutiny by client organizations. The Economic Times (Feb 12th Edition) reports that, Tata Consultancy Services (TCS) would be making greater scrutiny on the financial health of the prospective clients. Apparently, this is a risk mitigation exercise to safe guard the account receivables.

This is a role reversal here. Scrutiny and due-diligence exercise are not prerogative of marquee customers alone. The large vendors are expected to tighten their scrutiny to cherry pick the clientele they would like to have. The client scrutiny would involve many parameters, chief among them – understandably in the current economic situation – will be financial health. The large vendors would also push for shorter payment cycles and better volume to efficiently manage the cash flow and offer scale of economics.

Sign of changing times.

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© Dhandapani Ammasai, 2011. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given with appropriate and specific direction to the original content.

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