Disputes with business suppliers can be costly and damaging but, they can be avoided. In this article, we’ll share 10 ways in which you can avoid disputes with your business suppliers…
When you’re running a business, success often depends on creating good relationships with suppliers. When a business relationship goes sour, it can cause a lot of problems including having to quickly shop around for a new source.
In this article, we’ll be taking a look at the 10 ways in which you can avoid commercial disputes with business suppliers.
The first – and most important – way of avoiding disputes is to make sure that you properly research suppliers and do your due diligence. These days, there are more suppliers vying for business than ever before so, it’s essential that you thoroughly research reviews as well as looking up the company in official ways, such as searching Companies House.
While it may take some time to research and find suppliers, this will always be worth it in the long run as it will save you having to switch if a relationship with a supplier fails.
A lot of people make the mistake of either allowing a supplier to draw up a contract or, simply download a boilerplate contract from the internet. It may be stating the obvious but once a contract is signed, it is binding. Therefore, you need to make sure that you have a contract which very clearly states the terms and conditions of the business relationship. You should either ask a solicitor to draw up the contract or, at the very least, ask a solicitor to look over the agreement that you have written yourself.
Communication is an essential part of any business relationship and, while you don’t have to become BFFs with your supplier, it is a good idea to maintain a relationship which allows open and honest discussions. In many instances, business disputes can be avoided by simply sharing your views with the supplier in order to gain a resolution.
However great your relationship with your supplier is, it’s always a good idea to draw up a proper, formal dispute resolution process. This document will lay out the potential issues which may occur and, how both parties intend to work to resolve them. Having this document in place is a really good way of preserving the relationship with your supplier and nipping a problem in the bud before it becomes a dispute.
One of the most simple ways in which you can avoid disputes is to ensure that important information is recorded and that documentation is correct and up to date. This doesn’t mean that every interaction with your supplier has to be super formal; this can be as simple as, following a conversation with a supplier on the telephone to confirm what was discussed or agreed in an email.
Before entering into any agreement with a supplier, it’s extremely important to fully understand your liability. Business liabilities are the obligations that a company has including debts and other finances, such as assets. It is your responsibility to understand your liabilities and, a good business solicitor will be able to help you with this slightly complex process.
7. Educate Your Employees
In order to avoid misunderstandings with your suppliers, it’s vital that you train your staff to ensure that they are aware of the terms of agreement with a supplier. This should include guidelines on language to be used when communicating with a supplier and, the correct course of action which should be followed in the event of an issue.
Many supplier disputes occur because a small issue has been ignored, therefore allowing it to get out of control. Even if a problem or issue doesn’t see really important, it’s absolutely worth addressing it straight away to make sure that it doesn’t turn into a full-blown dispute.
Before escalating an issue into a full blow dispute, try to think of a compromise. While there are some things which may be ‘deal breakers’ for your business, you may find that, when thinking the issue through calmly, you are prepared to offer some flexibility. When both parties are prepared to engage in a little bit of give and take, they can avoid costly and time-consuming business disputes.
If you have tried to solve the problem with your supplier without success, you might want to appoint a mediator. A mediator is a third party who is impartial, i.e. has no stake in the outcome of the dispute. While you will have to pay for the services of a mediator, this will usually be a lot more cost-effective than taking legal action against a supplier – as well as being far less formal and can therefore, offer a way to salvage the relationship with the supplier.
Even with the best will in the world, you may still find yourself embroiled in a business dispute with a supplier. As mentioned in this article, the best way to avoid this is to make sure that you have agreements and other documentation in place which clearly states what is expected from both parties. This ensures that, should your supplier not deliver what has been promised and if legal action is required, you are covered and can expect to be compensated.
Please be advised that this article is for general informational purposes only, and should not be used as a substitute for advice from a trained legal professional. Be sure to consult a lawyer/solicitor if you’re seeking advice on the law. We are not liable for risks or issues associated with using or acting upon the information on this site.