From a legal standpoint, a simple and important step is to attempt to memorialize your major vendor relations in written, signed contracts. Parties may be more willing to try to break agreements, push for tighter credit terms, or stop selling to their less profitable customers/accounts when times are lean. Putting your vendor relations in written, legally enforceable form can be a helpful protection in such instances. Businesses that rely on the standard language found on the back-side of their vendors’ invoices and of their own purchase orders are often at a disadvantage.
The financial standing of a business’s vendors and suppliers can be as important as the financial standing of the business’s customers. Obtaining Dun & Bradstreet reports and reviewing major vendor’s financial statements (when possible) can help verify that your business’s supply chain stays intact.
Finally, it is never a bad idea, even in the good times, to look for alternative sources of supply. Having a list of alternative vendors can be a definite advantage if one of your major vendors falls victim to financial distress and your business needs to find an alternative source quickly.
— Rod Fluck