Collecting Your Money
by anil on November 6, 2007
If there is an MBA on collecting money, I would like to hire one with that qualification. Acquiring a client and then making a sales with them is just one side of the story; getting their money in your bank account is the other.
It doesn’t make any difference whether you are a giant MNC or a garage start-up and it doesn’t make any difference either even if your client is overwhelmed with your service/product. They will have an accounts department which functions in isolation and its sole duty seems to deliver enough verbiage and delay your payment.
Ever since I started doing business I have been seeing this pattern. I had discussed this with other business people and accountant/finance people whom I met on non-business occasions. They all secretly agree that delaying payment is considered to be “a revenue” and is a standard practice. So better be prepared for that.
It doesn’t matter where in the value chain your position is. Or whether you are in B2B or in B2C business (I know one private utility company with INR 3cr. (30 million) outstanding to be collected from its end-customers). Outstanding debt in B2C business is a global story though.
Further to my research I found out that everyone in the business chain is practicing it! So that means none is benefited out of it, isn’t so? I think so. So why can’t we decide to be principled to release the money we owe to other businesses and clean up the entire chain?
A Few Notes for Start-Ups
You gotta learn to live with this unfair practice or you die. See the following notes; they will save your business.
Take control of your cash flow: That is the life blood of your business however big or small your business is. Having everything right, the only thing which can upset your cash flow is the unexpected delay in collecting your money from your clients. So leave room for that. Check out with your peers in the business about the payment norms in your sector (it is there in very sector; only difference is “how long”). Make sure that you do not expect an inflow too ahead of it actually reaches you.
Plan only after money reaches your account: This is an extreme defense you can adopt. Do not spend before you get the money in hand. But this can slow down things a little bit. So practice a safe balance.
Plan as if delayed payment is the norm: For all your long term plans which are based on your business inflow, plan as if delayed payment is the industry norm. I have seen a business with a healthy turnover of INR 2cr (20 million) and with a strength as low as 10 crumbles just because of delayed payments.
Do not spoil relationships: Collecting money is a tough thing. They will make you feel like you are in their house to ask a favor! Be prepared as they will have stories to counter your arguments. Such situations are emotionally demanding. You whim and yell and shout; but make sure that it won’t cost your relationship. The world is so small; a spoiled relationship can cost your business–not just with them but in the entire sector depending on the influence of the people you are dealing with.
You made a sale? Do not relax. The real job starts after you deliver. Do not forget this.
IPTV: The Next Big Thing?
by anil on April 12, 2007
As a concept IPTV has been around for a while. Everybody talks about it. Everybody wants to subscribe to IPTV service. But companies are yet to wet their hands. Those who are new this new method of television content delivery can check out the Wiki page.
Players in India
All those companies who extended a piece of wire (“last mile” connectivity) to homes can be a potential provider of IPTV service in its broadest sense. So your cable provider, wired/land phone service provider or even the state electricity board can enter into IPTV business.
Telecom companies such as Reliance which doesn’t have last mile connectivity to homes are fast lying fiber connections to homes these days. They are preparing for the IPTV market.
Actually these companies are looking at a broader spectrum of services called “Triple Play” (combining voice, data and video) or even “Quadruple Play” (where wireless communications is introduced as yet another media to deliver video). This way one provider can cater all communication needs of a home all by themselves (and get all possible revenues).
In India, predominantly land phone service companies (BSNL/MTNL, Reliance, etc.) and cable service providers (Hathway, Asianet, Sify, etc.) are the potential players. MTNL in Pune and BSNL in Calcutta have already launched IPTV services on experimental basis. Reliance, with their newly laid FTTP (Fiber to the Premises), seems to be ready to follow.
What IPTV Provides
With IPTV, subscribers can expect to get what they are currently getting with their normal cable TV/CAS system. In addition to that it can provide Video on Demand (VOD). Those who subscribe to Triple Play providers can enjoy broadband and VoIP as well–all through just one connection and one IP device. All from a single provider.
Which Player has the Advantage?
BSNL is far ahead of the rest in terms of number of homes and coverage/geographical area. But coper pair has its own limitation in terms of the bandwidth it can carry.
One channel at SDTV resolution will take up to 1.4 mbps with fairly good compression. Simultaneous delivery of channels is necessary to keep user demands. For example, this is required if a subscriber is using a DVR which can record one channel while another channel is being viewed on the TV. Sometimes subscriber might prefer to use picture-in-picture which, again, needs multiple channels to be delivered simultaneously.
BSNL employs ADSL. ADSL can carry 2mbps which is too inadequate to support this. I’m not sure what technology they are using at Pune and Calcutta. One technology I can think of is ADSL2+ which can deliver up to 25mbps. But this bandwidth reduces substantially as the subscriber distance increases from the DSLAM.
Cable providers has an advantage here. HFC, theoretically, can carry up to 4.5gbps of data. It is a lot more than required to deliver multiple channels simultaneously even at HDTV resolution. So cable operators has a an edge over BSNL which uses coper as last mile.
Who Can Ride the Wave
Though people are waiting for the rollout of the service to sign up, business viability of IPTV service is yet to be proved. But if people receive it, IPTV can be a lucrative business. (It is possible to build several business models based on the viewer demography information IPTV system can provide. No such thing is possible with conventional cable.)
Those operators with HFC has the advantage of bandwidth capability. But HFC installations which are originally laid for analogue cable TV may fail to carry digital signals without quality degradation. Reliance with FTTP closely follows the above lot. Though their home count is less compared to that of cable TV operators, Reliance can provide better quality service due to obvious reasons.
Local cable operators are another category who can enter into this business. And thus they can move higher up in the value chain. Local cable operators can provide more localised content. They can stream targeted ads. But one thing which may prevent them from doing so; entry barrier of IPTV business.
High entry cost of IPTV business is constituted by IPTV/networking equipment costs and media rights. But local cable operators can buy media rights jointly. Equipment costs will continue to remain as a real entry barrier.
One good thing that can happen is the commoditisation of IPTV equipments including CMTS. If chip manufacturers can come up with solutions which are based on PC architecture, for example, rather than using specialised electronics (which drive up cost), this would become possible.
TRAI may consider unbundling BSNL’s last mile in future. If this happens local players can lease BSNL lines to run their business on.
Let’s wait and see.