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Third Party Thursday

APRIL 11, 2019

5 Steps to Measuring Your Vendor’s Financial Health

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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.

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Podcast Transcript

Hi – my name is Branan  with Venminder.Branan_Cooper_Circle_New_Web - 150

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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