Partner Article

Businesses warned to ‘watch for signs of trouble’

With the number of company failures caused by the recession not expected to reach its peak until next year, a regional industry expert is advising North East firms to watch for signs that their customers or suppliers could be in trouble.

Research carried out earlier this year amongst R3 members found that 95% of them said they fear the full impact of this recession has yet to be translated into the official insolvency figures, even though record numbers have already been reported during 2009.

Jim James, head of R3, said: “In many instances, one company’s insolvency can have a knock-on effect on many other firms, and can push businesses that were previously trading well into significant or even terminal difficulty.

“This can apply whether the company in question is one of your customers, where the implications of a loss of business are obvious, or one of your suppliers, without whom you might not be able to fulfill customer orders, meaning they might have to look elsewhere.”

Companies are being advised to keep close to the businesses that they work with, and to make sure they find out the facts if they suspect there is trouble ahead.

Mr James said: “Every business relationship has to be assessed on a commercial basis, but there can be benefits for sticking by key contacts when the going gets tough for them, as long as you can see they have measures in place to address and resolve their problems – and showing this sort of loyalty can reap long-term rewards when a customer in temporary difficulty gets back on their feet again.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .