5 Steps to Measuring Your Vendor's Financial Health
Are you monitoring your vendor's financial health?
Thoroughly evaluating a vendor’s performance is more than just about the numbers. It can help you discover weak financials which can indicate numerous risk factors. Here are 5 steps to measuring your vendor's financial health.
In this 90-second podcast, you’re going to learn how to measure your vendor’s financial health.
A team of qualified certified public accountants at Venminder evaluate vendor financial health every day for our clients.
We have 5 steps. Let’s get started:
Step 1: Determine if the company is a public or private entity and how you’ll obtain the financials.
Step 2: Next, once you’ve gathered the document, it’s time to review the financial statement. Remember these 3 key areas to watch for:
- Risk factors,
- Active legal proceedings and lawsuits
- And the auditor’s opinion
Step 3: Ask yourself the following:
- Do they have the revenue or have sufficient capital to support their ongoing operations?
- What’s the company’s net worth?
- Can they sustain their operations at the current cash level and over the course of the next year?
- What’s their debt-to-worth?
Step 4: Fourth, have a qualified subject matter expert, like a CPA, draft your comprehensive analysis.
Last, but certainly not least, begin to escalate or monitor accordingly.
Remember, thoroughly evaluating a vendor’s performance is more than just about the numbers. It can help you discover weak financials and weak financials can indicate a number of things like litigation, bad press and a decline in service levels, to name a few.
I hope you found this podcast helpful.
Thanks for tuning in; catch you next time!
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