Strengthen your firm's weakest link

All well and good, quite proper, in line with the evolving culture that failure is not necessarily a deadly sin, and nothing at all sinister or untoward. In one case that came to our attention, the business concerned made great efforts to work with its suppliers, establish a good working relationship and explain exactly why the original business had run into difficulties and why those problems were unlikely to be encountered again.

The debts of the predecessor company were history, but the relationship was still there to be worked on and nurtured.

As these tales always do, this one has a “but the other company …” side to it. And so, in another example to cross our desks, the reborn company behaved as though it was also a totally new business. It treated the relationship it formerly had with its suppliers with a certain amount of disdain: the debts were in the past and so was any need to explain why things were going to be different this time.

These examples – and they happen all the time – came to mind when we were working on Sarah Perrin’s cover story on the new corporate rescue culture. With Gordon Brown’s economic forecasts still looking decidedly iffy, the vulnerability of companies that buy and sell to each other will be exposed as surely as the good times generated the ‘win-win’ culture.

In short, you can be damaged – or even brought down – by the failure of customers or suppliers. All the more reason why forward-looking, risk-managing FDs should not only be concerned about the health and welfare of their supply chain partners, but also work with them to share information and knowledge to help stave off collapse.