Financial Risks in Business
How to Intelligently Manage Your Suppliers
Running a business isn’t without some degree of risk. This doesn’t mean that you want to ignore the things that you can control. Here are some ideas that you can use in order to manage your suppliers intelligently.
Develop Tracking Tools
Create tracking tools that will allow you to know when and what types of orders that you’ve placed with each of your suppliers. This doesn’t need to be a specialized software package to help you with the management process. Even a simple spreadsheet can work to your advantage. You just need to know when to expect the arrival of your items and whether you’ve paid for them once they’ve been received.
Know Your Risk
Some suppliers are more reliable than others. Before entering into any sort of agreement, you need to be aware of the level of risk for the other business. Using a supplier risk analysis service will help to protect your business from being taken advantage of by an unscrupulous business or one that’s struggling. You don’t want to be left with making a payment on an item that will never be delivered. This scenario can significantly hamper your ability to conduct business.
Sign Binding Agreements
The point of signing a contract is so that two parties can hammer out the details of their arrangement. Be very clear in your agreement. You’ll also want to lay out contingency factors for missed or delayed shipments. This will give you some sort of recourse if your supplier isn’t holding up their end of your agreement. Consider laying out time parameters when it comes to the turnaround time that you expect for receiving supplies as well as how soon payment should be expected once you’ve received your items.
Build on Relationships
You need to develop your relationship with your suppliers in order to manage the level of risk that you may experience. For your good suppliers, they may be able to make recommendations for when it comes time to consider switching over to a new supplier. Word of mouth is a better indicator of supplier performance than having to rely on your own research. Another benefit of having a good relationship with your suppliers is that they may put your needs above the needs of other customers that aren’t as reliable.
Mitigating your supplier risks mean that you need to be efficient and focused. Use these tools to help you to manage your suppliers without having to suffer financial setbacks in your own business.
Rachelle Wilber is a freelance writer living in the San Diego, California area. She graduated from San Diego State University with her Bachelor’s Degree in Journalism and Media Studies. She tries to find an interest in all topics and themes, which prompts her writing. When she isn’t on her porch writing in the sun, you can find her shopping, at the beach, or at the gym. Follow her on Twitter and Facebook: @RachelleWilber.
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