08 January 2009

Viewpoint : The Blog

Supplier beware

Published:: 25 November 2008
Article Type:: Viewpoint
Byline:: Nick Allen

Cash-flow is the life blood of the business and when it stops flowing alarm bells start ringing. As the financial turmoil spreads from the banking sector to the wider economy, suppliers are facing tough decisions on a daily basis, whether to supply to a customer or not.

In the days of easy credit and a booming economy, suppliers could be reasonably confident that they would get paid. Credit cover was readily available from insurers and the wheels of trade moved smoothly. But now, as retail gloom hits the high street, credit insurers are a great deal more cautious about providing cover to supplier contracts with customers. As insurers remove cover, suppliers are left with the tough decision on whether or not to take the risk on supplying the goods. In a growing number of cases the risks are considered too high, which is having the net result of speeding the demise of vulnerable customers. And of course, as more customers go down, then more suppliers follow.

However, it’s hard to blame the credit insurers, figures released by the Association of British Insurers indicate that UK insurers faced a 41 per cent jump in claims over the last quarter. In fact, the credit worthiness of the credit insurers themselves is having an affect on bank loan decisions where the loans are based on bills yet to be paid.

When distrust extends into the wider trading environment, the risks are compounded, trade slows and cash-flow becomes the critical issue. If suppliers are going to protect their own interests, then they are going to have to be able to assess the risks in dealing with a customer more accurately. Under these circumstances, information becomes a valuable commodity that can make all the difference between getting paid and being left with a bad debt.

Executive Jobs
Job Title	Job Location	Job Position
Associate Procurement Director ...	London	Permanent
Branch Manager ...	London	Permanent
Branch Manager ...	Yorkshire	Permanent
Business Development Director ...	Bedfordshire	Permanent
Business Development Manager ...	England	Permanent
Business Development Manger ...	North West	Permanent
More Jobs