Everyone loves a good surprise. Maybe is it an unexpected birthday present. Or perhaps it is a visit from a dear friend that you have not seen in quite some time. An unforeseen professional opportunity is offered to you that would open up new growth and financial rewards. There are so many events that pleasantly surprise us and we do look forward to those.
Of course there are the unpleasant surprises. A few examples that come to mind include a flat tire, power outages, a software package that does not perform as advertised. When selecting a supplier after a sourcing event, you definitely want to ensure they are financial stable enough to perform for your organization for the life of the contract.
There are many ways to review the supplier’s financials, even if they are a small private company. Some sourcing teams ask for the information during the bidding process. In addition, it is recommended to get as much info from a third party as possible.
This week’s blog of the week features Cottrill Research on Supplier Financial and Diligence Resources. It offers a solid list of resources to utilize when reviewing a supplier's financial stability. Some of the resources do have a subscription fee but others do not. It can be overwhelming and often hard to know where to even begin. This list is a great resource and will allow you to evaluate your options prior to awarding.
One recommendation is to make sure to evaluate a supplier against others in the same industry. Often their financial scores look shaky but others in the same field do as well. It is just the way that sector is built with perhaps a lot of capital investment required for operations.
We all have a lot of pressure to get on to the next task or initiative. You might be tempted to skip this step. It might work out fine for you but it might not.
What does your organization require from suppliers in the way of financial records? Have you had any unexpected surprises that were not welcome ones? How did you remedy the situation?