When a company experiences financial difficulties, this will have direct implications for all of its business partners. The financial distress of a business partner will bring financial risks to those it does business with. For example, in insolvency proceedings outstanding receivables are often not recoverable in full. So what should you do if a customer, service provider, supplier, landlord or tenant becomes insolvent or experiences some other comparable crisis?
Depending on precisely what type of partner is involved, a crisis can have various effects on your business and require different responses. There is no one single answer to the question of impacts, as they are often complex and closely linked to your own strategic positioning and priorities. The following questions can help you determine the answer: How important is this supplier for your business model? Can you prevent a stoppage in production? Can you replace your supplier at short notice if it is no longer able to work for you? Is this customer a significant revenue driver for your company and can you offset potential sales losses elsewhere? The answers to these questions will help you determine what the impacts will be and indicate specific responses to the financial distress of a business partner.