4 Safe Business Financing Tips When Comparing Suppliers
Friday, March 8, 2019, 6:00 PM | Leave Comment
If you‘re managing your own large or small business, the vendors you choose can have a big impact on the efficiency of that business in a variety of areas.
There are a few tips to consider when you‘re looking around for a new supplier. Understanding some of these factors might help you keep supplier costs down as well as ensure reliability and quality in your products.
Here are just four major things to ensure that your new supplier is great for your business finances.
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Consider Supplier Redundancies
Most suppliers you will work with on any scale operate distribution networks to get your products to you in a timely fashion. On the vendor‘s end, weather, traffic or road problems, and equipment malfunctions are just a few of the things that might impact a key link along that chain of distribution.
Many vendors build redundancies into their networks that should be able to pick up the slack if one piece of the puzzle experiences a disruption. Checking with your new supplier about redundancies can give you an extra layer of security. If they don’t, make sure to look and see if their major locations are in problem areas where ongoing natural and man-made disasters may result in delays with your shipping.
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Manage Your Supplier Risk
Most businesses expend a lot of time and effort assessing customer credit risk. This is a good way to ensure the overall values of your sales stay high. However, not everyone thinks about how to get supply chain risk analysis for checking potential suppliers.
Credit problems with a supplier can, in some cases, pose a greater risk than any you might face with a customer. Problems in any aspect of the supply chain can cause a major disruption that leaves your business idle for long periods.
There are several early warning signs that you can look for. Be sure to work with a professional service to ensure that you know the financial stability of the company you’re signing on with so that you can mitigate your own financial risk.
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Ensure They Can Grow
It’s common practice to find the most inexpensive supplier that you can through a series of bids. However, part of your financial decision should be made based on how well the new supplier can accommodate your needs. You should find a vendor that has clear scalability benchmarks for you to review.
The supplier should be able to keep up with production demands for your business. This aspect should include any sudden increases in volume you might have for unexpectedly busy times, or should you find yourself in the midst of major business growth. If your business booms but your supply can’t match, that may stunt you financially for the long term. Finding a supplier that can match your scale and change according to your needs as you grow.
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Check Any Outsourcing
Some suppliers do all the production and delivery themselves, and some of them may outsource part of this process to another company. This outsourcing can make your supplier more efficient and ready to meet your requirements, but it also adds another layer of potential financial risk for you should something go wrong with the subcontractor.
Check all businesses associated with your supplier to make sure they meet your standards. Having reliable outsourcing for financial risk analysis can make this process simple. Working with professionals, your business can get a proper analysis both on the vendors and the people they work with so that you know the full scope of financial risk that you are taking on.
It’s essential to make sure that your company is well informed before signing a contract with any vendors. Without being aware of your financial risk, you may find yourself signed on to a sinking ship that could take your company down with it.
At the same time, you may find yourself skipping over a rapidly growing business without realizing the potential benefits to your company. Take the extra time to do proper research into your suppliers so that your company can have a stable foundation of operations to work from.
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Meghan Belnap is a freelance writer who enjoys spending time with her family. She also enjoys being in the outdoors and exploring new opportunities whenever they arise. Meghan also enjoys researching new topics that help to expand her horizons. You can often find her buried in a good book or out looking for an adventure. You can connect with her on Facebook and Twitter.
