KNOWING YOUR SUPPLIER, CUSTOMER AND EMPLOYEES ADDS VALUE TO YOUR BUSINESS
In 2015 you can no longer avoid the responsibility of knowing about the stakeholders which interact with your business. Many reasons exist why such information is required today. Probably the most important aspect is; having confidence in the reputation of your business stakeholders.
Just knowing your customer has a good payment reputation is not enough anymore. In today's modern business environment, a good overall reputation is perceived to be equally important. Increasingly your reputation is being linked to that of the stakeholders which interact with your business.
If you believe there is no commercial advantage in defending your good reputation, just ask the people and organisations which have been caught out in recent times. They will tell you the damage of a "bad news" story relating to their stakeholders and not having a sound defence for not knowing what they should have known. The cost is often horrendous to repair the damage caused, even if you are found to be not guilty by association later.
Perhaps there are matters you want to keep secret. If these secrets are exposed, your costs keep escalating expadentially. It seems very few business people and their organisations have yet to come to grips with costs of repairing a reputation lost as a commercial factor in today's business environment.
The following is a brief review of why it is commercially important to know the reputations of your supplier, customer and employee.
Knowing your supplier is essential if you are promoting your business's ethical behaviour as one of your key marketing points of difference from that of your competition. Many an organisation has lost creditability and spent thousands of dollars trying to repair the damage of being caught out by using the wrong supplier.
Similarly, selling counterfeit products or buying from criminals equally does nothing for your image. In today's business environment, with a constant emphasis of buying cheaper, coupled with the quality of counterfeiting, it is so easy to fail in to the trap of buying from the cheapest supplier.
Who are your customers? Many suppliers barely know the ownership of the various trading entities they sell to or their key employees and their roles. Hours and dollars are lost as your accounts personnel try to find the people responsible for authorising the unpaid invoice for payment and /or to release the payment. What about the costs of the "difficult customer" who always has a reason for not paying. Then again, if you did not identify the real business operator was a bankrupt you may not get paid at all.
What about payment history for these new customers? Too often, your credit and accounts receivable personnel find out, the customer only started doing business with you because they haven't paid their accounts with other suppliers. So now you are on their slow-payment merry-go-round as they play one supplier off against the other.
Employees are equally of good and bad character. Many a great salesperson has turned out not to be so great. Likewise many other employees and yes, even credit and accounts receivable employees, turn out to be and less than desirable. Whilst accountants and bookkeepers help make a great business, they have also been known to destroy a business.
The integrity of your stakeholders from a payment and social responsibilities perspective is only one aspect. However what about your legal responsibilities as a director? As a director of a business today, you have a positive responsibility for knowing what is happening in your business and of the reputational standing of your stakeholders.
Somewhere in the world today is an anti-money laundering and counter terrorism financing Act. To some degree this Act may also affect your business. The core theme behind any of these Acts is to ensure your business is not doing business with criminals or terrorists.
The value in subscribing to the themes of the Act for a director is to help ensure your business only deals with the right sort of stakeholders. Knowing the stakeholders involved in your business have a positive reputation is becoming increasingly important when seeking quality business associations. In particular, an unblemished reputation is a critical factor if you wish to do business with the major organisations of the world.
Knowing the stakeholders of your business makes good business sense. It is also a legal and fiduciary obligation. The costs of any negative exposures when your business's stakeholders are found to have bad reputations are always out of proportion to any positive financial advantage gained earlier. Therefore it makes good commercial sense to maintain a positive attitude to reviewing the reputations of your business's stakeholders.