Steps to Insure Against Vendor/Supplier Failures

Vendor Management for Small Businesses

For a small business, vendor defaults and failures can be as serious as customer defaults and failures. As in managing customer relations, there are also a number of steps that can be taken to prevent your vendors’ financial problems (or indifference) from becoming your problem.

Legal Protections

From a legal standpoint, a simple and important step is to attempt to reduce your major vendor relations to written, signed contracts. Particularly when dealing with smaller customers vendors are more willing to try to break agreements, push for tighter credit terms, or provide less than prompt deliveries. Putting your vendor agreements in written, legally enforceable form can be a helpful protection in such instances. Businesses that rely on the standard language found on the back-side of their vendors’ invoices and their own purchase orders are often at a disadvantage.