What to do if your supplier goes out of business
by Rebecca Button on July 8th, 2008
Well hopefully you don’t have one single supplier! If one of your major suppliers does in fact notify you that they are closing their doors, there’s no need to panic. Simply contact your other supplier(s) and speak with them about the possibility of you moving more business their way. Determine if they can handle the new demand and talk about pricing options with them (as they may offer a discount for more business). Also remember to contact the supplier that is going out of business and ask if they have any products that they can still supply you. If they do, you might be able to get a "going out of business" price on the items.
In the event that you have paid for items that have yet to be shipped when the notification of the closing comes, DEFINITELY contact the supplier to figure out if you will be receiving the products you paid for. If not, ask about taking other products up to the equivalent value you’ve already paid. You may have to enter into court proceedings but this of course is highly undesirable as it will likely cost you more to hire a lawyer and pay court fees. Try to work something out directly with the supplier but if this does not work, make sure you consult a lawyer for further action.
The best way to avoid any of this is to pay attention to clues that might indicate the supplier is in trouble. Some of these include:
*Difficulty in reaching the supplier by phone or email.
*Repeated lag in shipping timeliness and lack of product.
*Employees begin to quit and/or ask if your company is hiring.
The best plan is to always have back up suppliers. This will save you a fortune in time and money in the event that one of your major suppliers does indeed go out of business.