The latest news that the iconic high street fashion group – Arcadia – is on the brink of collapse, makes for uncomfortable reading. If the current speculations unfortunately prove to be true, they will join a large swathe of retailers who have suffered a similar fate in recent months.
What, though, do headlines like this mean for the suppliers of beleaguered companies?
Businesses are all feeling the pressure of the global pandemic, and now, perhaps more so than ever, it is vital that those in the business of supplying goods and services ensure they are getting paid. If not, they run the risk that they too may face a similar fate to the companies making the headlines.
So, what can suppliers do to protect themselves?
First, check the contracts you have in place with your customers. Are they up to date and do they correctly reflect the business being carried out, in terms of pricing and payment terms?.
Do you have a retention of title clause? Such a clause will typically provide the supplier with the comfort that once they have sent goods to their customer, with payment pending, the supplier remains the legal owner of those goods until the customer has made payment. If a customer subsequently goes into administration without paying you, you can notify the administrators of your retention of title, with a view to your seeking recovery of the goods, so you can hopefully sell them on (providing there are no contractual restrictions to you doing so).
Are your current customers adhering to your payment terms? If not, make sure you do not let matters slide. Revisit your current credit control procedures. Are they working for you, or do they need adapting to the current climate? It is vital that you remain in regular contact with your customer and get as much money in as soon as you can from them. The longer you leave matters, the greater the risk is that you may not get paid if your customer is in financial difficulties. It can sometimes be true that those who speak the loudest get paid first!
It is vital that all suppliers keep fully on top of the relationships with their customers. If warning signs start to appear that your customers may be suffering financial, you should act fast to minimise the impact this may in turn have on your business.