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Evaluating the Financial Condition of Suppliers

Author(s):

Dr. J. Patrick Cancro, C.P.M., A.P.P.
Dr. J. Patrick Cancro, C.P.M., A.P.P., Assistant Professor of Business, Penn State New Kensington, Upper Burrell, Pennsylvania 15068-1798, jpc2@psu.edu
Dr. Michael A. McGinnis, C.P.M., A.P.P.
Dr. Michael A. McGinnis, C.P.M., A.P.P., Associate Professor of Business, Penn State New Kenskington, Upper Burrell, Pennsylvania 15068-1798, mam47@psu.edu

89th Annual International Conference Proceedings - 2004 - Philadelphia, PA
Abstract

A challenge facing many supply management professionals is that of using basic accounting information to evaluate supplier financial health. This is especially important because of the need to exercise due diligence when selecting and monitoring sources. The following section provides an overview of the importance and challenges of monitoring supplier financial health. Next, is an overview of selected basic accounting techniques and how they are useful in monitoring supplier financial health. The third section discusses how purchasing and supply professionals can use common non-financial sources of information to identify suppliers who might be in financial distress. Finally, we discuss additional sources, including professionals in other areas of your organization, that can help you monitor supplier financial health.

Evaluating the Financial Condition of Suppliers — 27 KB (PDF)