One of the biggest hurdles Small and Medium Enterprises (SMEs) face is piling debts. If not carefully managed, debts can slow down a start-up or bring it down altogether. It is this situation that motivated Donald Anditi and Ngigi Nyoro to set up a portal that exposes defaulters.
The web portal, evasion.co.ke brings to light errant debtors so that companies can deny them future business.
Mr Anditi is a finance and banking degree graduate from Moi University while Nyoro is an app developer at the Jomo Kenyatta University of Agriculture and Technology.
Mr Anditi told Enterprise that SMEs pay a subscription fee to receive information on the companies listed on the platform. Firms also pay a fee for uploading information that is validated by the company’s internal team.
“No company wants its debt history exposed and everyone wants to keep a clean name that helps keep business flowing their way,” says Mr Anditi.
Mr Anditi, who is the chief executive of the year-old firm, saw an opportunity in adversity when the firms for which he was maintaining financial books shut shop, strangled by bad debts.
He had also set up a travel and tours company which had shown signs of huge potential until it came tumbling down thanks to mounting debt mainly by ‘nice’ clients who issued post-dated cheques; however, on maturity the cheques bounced.
Some clients simply refused to honour their debt payment promises and the company found it difficult to honour its financial obligations.
Mr Anditi thus decided that it was time bad debtors were exposed.
The web platform, which was piloted from April to August last year largely works with SMEs dealing with goods and services offered to churches, lawyers and tour and travel clients.
A client, Moses Mwicigi who runs a products delivery service said he uploaded a ‘complaint’ on a defaulting church that withheld payment of Sh40,000 for goods supplied.
“The church’s bishop agreed to renegotiate repayment when he heard we would list his church as a debt defaulter,” Mr Anditi says.
Mr Anditi says he started by uploading information on the clients that refused to pay for services rendered by his tour and travel business. Two of the clients have since repaid their debts so that their names could be removed from the portal.
“Some SMEs are very small and can hardly afford to sue a company that defaults but having an online platform to upload such information has seen them get positive feedback with defaulting companies agreeing to settle the bills,” he says.
Mr Anditi says defaulting companies also engage them on how to address the debt through amicable means. This has seen them refer companies to arbitrators to not only help deal with the payment of debt but also to mend relations between feuding SMEs.
Mr Nyoro says all SMEs adversely mentioned were informed before the information was uploaded and given an opportunity to address the matter with their creditors.
About 10 lawyers who withheld payments meant for their clients have also been on the receiving end. The platform currently receives many requests from litigants for information about lawyers they intend to approach for legal services.
“Clients quietly change lawyers on learning about their errant behaviour. Public schools as well as landlords that withhold payments meant for book keepers as well as auditors’ fees are also exposed,” says Mr Nyoro.
The platform, adds Mr Anditi is in the process of being upgraded to facilitate a mobile phone-based app that will enable more Kenyans to track defaulters and give them a wide berth.
The firm uses colours to define defaulters’ frequency of their offences.
Red is for businesses mentioned for default more than 10 times, green means being mentioned once while yellow is for those mentioned between two to five times.