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Securing the Supply Chain

It seems not a day goes by and we are hearing of yet another well-known Company that has succumbed to the difficulties within the market and closed its doors.  But how can we spot the signs of a supplier that’s in financial difficulty and how can we protect the University?

If a supplier goes into administration it can be difficult to recover funds, HMRC and the banks are first in line for pay-outs.  The Procurement Team strongly advise staff and students never to pay a supplier for goods and services until they have been received.  Aside from the issue of having to recover these funds if the supplier fails, by paying upfront you also lose any incentive suppliers have to deliver promptly. 

Goods and services should also never be goods receipted on UBW until the items have been received or the service delivered. 

An organisation that is in difficulty will often try to minimise any outward signs they are struggling to prevent losing staff, suppliers and customers.  There are some indicators to look out for though:

  • Accounts – an organisations accounts may give an indication that they are struggling, valuable financial information can be obtained from Companies House if the organisation is a limited company.  Credit checks may also help and we can look for any County Court Judgements that have been made against the supplier,

  • Suppliers seeking to reduce payment terms – this may indicate a cash flow issue within the organisation,

  • A reduction in the number of staff – have you noticed a lot of your contacts have left the organisation or the organisation has had a redundancy programme,

  • A sudden change in working patterns, for example reducing shifts or operational days,

  • The supplier avoids communication or staff may appear uncomfortable when questioned about the business,

  • A sale of assets,

  • Lack of investment in the business, not keeping up with competitors in terms of technology and equipment,

  • Delays in delivery schedules or partial delivery – these issues can be caused by the supplier owing payments through the supply chain.

If your School/ Department utilises a supplier whose products and services are critical to the continuing operation of your service please contact the Procurement Team.  There are a number of steps we can take to mitigate the impact of a critical supplier going out of business with little or no warning.  It is better to be proactive and have a plan in place that we never have to use.