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Offline: Database obsession

Author: Rene Beekman Date: Fri, Feb 26 2010 8207 Views
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Many Bulgarian companies seem to work with a cash-flow system that sets hard administrative limits on calendar months and years. It is not an exception to cover each month’s expenses with income generated that same month.

And so, at the end of every month, a chicken-and-egg game is played to get bills paid. This practice, of course, makes companies extremely vulnerable to economic fluctuations whereby a few late-paying customers can play havoc with the continuity of business operations.

Not for the first time, Bulgarian media reported the launch of a centralised database of defaulting debtors - both companies and individuals - to banks, district heating, water and electricity companies.

As with previous launches of this scheme, legal questions of how privately held companies would share personal data was conveniently ignored.
To deal with legal entities that default on their debts, one Bulgarian company came up with more than just an idea; it launched an online database where any company can, publicly, register defaulting debtors.

According to the site’s terms and conditions, the company that enters the details of its debtors is responsible for the accuracy of the data entered and for updating the entries "should there be any changes" (read: the debtor has paid up after his/her company’s name showed up in the register).

To avoid entries lingering in the database, all entries are automatically flushed six months after they have been entered. As long as the slowness and inefficiency of Bulgaria’s legal system makes it, to all practical purposes, impossible to collect debts, short of hiring thugs, this way of publicly hanging debtors out to dry could just prove to be the most efficient way to receive payments due.

The legal system’s slowness and inefficiency also makes it unlikely for companies who have been registered as defaulting debtors to fight the registration in court. Paying debts due seems the quicker and less painful route.

The database’s Achilles’ heel could be its openness to abuse as an instrument for unfair competition. Registering a competitor as a defaulting debtor is a quick way to make their business operations a lot tougher and there’s little they can do about it.

After the first month in operation, DebtNet claims to have 1000 registered companies. At 20 leva a registration, that income could prove desperately needed for company CEO Vladimir Georgiev to ensure the protection of several "good boys".

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