Are Your Suppliers Losing Access to Credit and Capital?

In the past couple of weeks, I've written a few times about how banks are curtailing access to capital and how this can impact the probability of supplier quality or performance related issues -- not to mention the financial viability of your supply base. I'm not alone in my concern about supplier's acess to capital. Consider this recent Business Week article that tackles the same subject. In it, the authors suggest that some small companies are having a particularly hard time borrowing..."In Ohio, banks are refusing to renew lines of credit and calling in loans made to decades-old family businesses that are current on payments." But will Treasury's bailout of the mortgage and banking markets help? Not according to Business Week. "With banks like Wells Fargo already pulling back and others tightening standards further after the upheavals this month," the authors opine, "even the $700 billion bailout isn't likely to unlock credit for affected small firms immediately." And that's further reason why procurement organizations should invest in both supplier risk management and downstream payables / supply chain finance capabilities as soon as possible.

- Jason Busch

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