The last thing an employer wants is to be put on the spot. He has no idea how to handle these risks, and it’s not his responsibility.
There are consequences that he will face if he neglects his responsibility, however. For one thing, the employer might lose key employees in a tumultuous workforce or instigate labor problems with unhappy workers. Also, suppliers will complain more about the lack of promised merchandise—which can lead to more lost money and business opportunities from potential customers.
This is especially true in cases where a company goes bankrupt and runs out of cash after ignoring its supplier’s worries for too long (but this is just one of many ways that suppliers lose patience). Charging interest on unpaid balances is one way that suppliers try to get money from the company, but this rarely helps the situation.
Instead, suppliers are more likely to resort to legal channels for repayment and compensation—and these cases can turn ugly, especially when dealing with smaller businesses. Larger companies are more likely to be able to handle such legal action, but all companies (large or small) will be faced with tough public relations problems if they aren’t careful about their responsibilities.
Suppliers can go out of business quickly if they don’t get payment from their customers. If a supplier shuts down and goes out of business, it doesn’t help the company at all. A supplier can easily handle any financial issues, but this is a risk that some may not be able to handle.
What happens if the company shuts down? Will suppliers get paid for their work? What does this mean for customers and business relationships? These are all questions that arise when a major company is going under. The end result is always a loss in revenue—and this affects the way suppliers will view the company in the future. Losing business because of neglect of one’s responsibilities can lead to missed opportunities to do business with other companies.
For some companies, it is difficult or impossible to keep track of every “little” aspect of corporate responsibility and how it affects their employees, shareholders, and customers/suppliers. There are, of course, a lot of legal issues with responsibility, but it’s not always easy to know how to handle these responsibilities. The easiest way to avoid problems is to be aware of which ones apply to the company and then take appropriate action in order to address them.
It’s part of a company’s responsibility to make sure that suppliers are paid promptly when they do work for the company. If items aren’t paid for on time, suppliers may feel that their contracts have been breached and they may choose not to work with the company any longer. This is an important part of a larger discussion about credit risk and how risk can impact relationships within companies as well as between companies.