Every business no matter how big or small is susceptible to the risks in its supply chain.
With the fall in the oil price causing increased levels of business distress, why not start 2015 by doing all you can to limit the impact of supply chain insolvency on your business. Follow these six easy steps:
- It is vital to have accurate and up to date financial information as part of your supply chain management process. Verify that the data provided is accurate and there are no poor credit alerts to indicate a current or future issue.
- Carry out a legal audit of your existing contractual terms and conditions and verify that the protections you believe you have in place do in fact exist.
- Build a contingency plan in the event of a financial insolvency in your supply chain.
- Organise and attend meetings with key management personnel at the supply chain company in difficulty. Ask them pertinent questions and challenge them to evidence in writing what they say.
- If time is required to obtain cash to alleviate an adverse creditor position then negotiate clear revised obligations. Try and seek additional security of parent company guarantees or bank bonds. Try and critically evaluate what is happening within the business and talk to restructuring and turnaround professionals for support and guidance.
- Be prepared to act quickly and decisively as news information presents itself. Consider taking aggressive debt recovery action potentially using winding up proceedings or creditors’ administration proceedings for particularly large sums owing.
Share this information internally with the parties who are involved in the decision making process. Review credit risks and take action immediately. Collate the collected information in a central hard drive or in the cloud, where it can be easily and quickly accessed. Be prepared to make very fast decisions.
For more information, help or advice please contact Andrew Cawkwell on 0191 211 7957.