Late payments and your supply chain
When it comes to minimising customer late payment, a strong supply chain can make all the difference for your business.
In times of difficulty, knowing that you have businesses in your supply chain that are stable and secure can reduce your worries around late payment and being left without critical supplies.
It’s impossible to accurately predict what will happen in the future, as this year has demonstrated to us, so it may seem that it comes down to luck whether or not you have resilient businesses in your supply chain. But there are some things you can do to reduce your chances of being left with a supply chain in disarray.
Focus on sustainability
Sustainability is something that’s important to many businesses at the moment, but when it comes to your supply chain there is more than one way to consider it.
For many clients and consumers environmental sustainability is of high importance. If this is something that you consider to be a value of your business, it is important to ensure that it is a value that is reflected throughout your supply chain.
The other type of sustainability, and one that is of higher importance in building a strong supply chain, refers to how conscientious the businesses in the chain are towards each other.
This includes obvious indicators of shared responsibility, such as paying suppliers on time or offering direct support. Other, smaller indications that a business would contribute to a sustainable supply chain are a willingness to negotiate contracts and an open channel of communication.
If possible, when deciding which businesses to work with as part of your supply chain, look for reviews from other businesses that have worked with them and discuss the different ways you can work to support each other outside of your contractual obligations.
Another way to strengthen your supply chain is to diversify your suppliers and your clients. This seems like an obvious step to take when it comes to clients, but some businesses may not see it as being so important when it comes to suppliers.
In the past, it may have seemed unlikely that if there were issues with your main supplier it would be difficult to find another, but this year has demonstrated how quickly things can change for an entire industry.
By diversifying your suppliers, you’ll already have different contacts you can turn to if something goes wrong.
Consider local suppliers
As well as diversifying your supply chain, it could be worth considering local suppliers. Although local suppliers may charge more, there are several benefits that could be more valuable to your business in the current climate.
Because goods will have a shorter distance to travel, there is less chance of disruptions and if something is wrong with your order, or you find you suddenly need more supplies, it should be easier to get goods to you at short notice.
It also means that you’ll be reinvesting in the local economy, and may find it easier to build a strong relationship with suppliers as you’ll have more in common.
Finally, regularly performing risk assessments on your supply chain can help to protect your business from late payments and other issues.
This can be as simple as talking to your suppliers about their current concerns and following industry news, or you can do a deeper dive to identify potential concerns by regularly checking credit reports, or even their social media accounts and searching for the company on Google, all of which can highlight any red flags.
Are you struggling with late payments that could end up travelling through your supply chain? Our professional debt collection services can help you recover overdue payments before you find yourself in a position where you are unable to pay suppliers.
If you want to talk to one of our consultants about the support Hilton-Baird Collection Services can offer, call us on 0800 9774848 or request a call back.