As the economy enters a new phase of uncertainty in the Brexit era, it’s more essential than ever to keep you guard up when outsourcing work to contractors and sub contractors. 

If you plan to freshen up your supply chain in the New Year, make sure you carry out thorough financial checks before making a commitment to any new supplier.

Evaluating a supplier’s financial health

  1. Source and examine a potential contractor or sub contractor’s published accounts.  Examining economic performance over a number of years should give you a feel for their economic health and the direction in which the company is heading.
  2. Run more holistic reports on a company’s financial health. This type of service is available from financial risk management firms, such as Company Watch.
  3. Get in touch with as many of the supplier’s existing customers as possible and probe for any difficulties that may have emerged. You can also use the internet and social media to monitor potential partners and assess whether their reputation may hinder a healthy business relationship. 
  4. Take stock of the company’s personnel. It is sometimes tempting to switch suppliers to follow a key individual in the company who has moved. Remember, dealing with the same agent at a different company by no means guarantees the same level of service. If a trusted contact leaves one of your contractors or sub contractors it could also signal financial distress in an existing company you deal with.

Using a financial risk management service simplifies the health check process. The Company Watch H-Score® measure, which forms part of Altius‘ supplier assessment process, is a very good indicator of a company’s overall financial health, and any partner with a score of 25 or lower is potentially at risk.

Company Watch has developed specialised mathematical models that differentiate financial winners from losers and has succeeded in predicting the vast majority of company failures in advance over the past 15 years.

The system is integrated into the Altius In-Touch portal, used by clients to manage and select suppliers.  This enables clients to gain excellent insights into the financial status of current and potential contractors and sub contractors.

Take the Altius Supply Chain Health Check to spot whether there are any risks in your supplier base.