In today`s precarious economy, you need to take care of more than just the health of your own business. You should also pay attention to the condition of your suppliers. If a struggling supplier goes bankrupt, you can make an effort to fulfill your own orders. And of course, a solvent supplier can also experience a major disruption due to a flood, fire, or other disaster. Quick Tip: Before you submit anything, see what kind of documentation you may need to collect for your claim. In this case, you can specify things like your itinerary (which should include travel information, travel details, cost breakdown, and payment information); and receipts for non-refundable deposits you have paid. Or in the event of a trip interruption, you must attach receipts for reasonable expenses in order to continue your trip or return home. For more information on what you need to include, see our checklist for required documentation. You need a transition plan that includes tasks to find a replacement supplier, terminate the old supplier, onboard the new supplier, and communication plans throughout the process. You need to make sure that tasks are assigned to people with a reasonable schedule and due date. When a big transition like this happens, it`s important to improve collaboration and track tasks in a project management system like BaseCamp or Asana. It also gives insight into what`s going on and when, so you can track progress without getting bogged down in the team.
Of course, you can assume that the process of switching suppliers in the short term will be relatively expensive. It is important to take the time to understand what is happening with the provider, how he reacts, what his schedules are and what are the trigger points of the actions on his side. Do they turn off the lights and close the doors? Or do they change services and people over time? When will services be interrupted? Do they have a transition plan for clients? Really take the time to explore how the provider can help you support your transition. And if they can`t support you, it`s best to know in advance. Given the current state of the economy, which has been largely closed due to COVID-19, we expect a sharp increase in bankruptcy filings in the coming months. It is important that companies know the right course of action when they have a supplier filing for bankruptcy. Each case and scenario is different, and therefore all supplier insolvencies are unique, so the following summary should not be used instead of consulting a lawyer on the details of each situation. However, the following considerations may be helpful in making business decisions and seeking advice from insolvency advisors.
However, the consequences for your business can be serious – from lost revenue to a greater threat to your bottom line. « The potential loss of a supplier is a very, very serious problem, and it can build or break a business, » says Ken Gaebler, a small business expert and director of Gaebler Ventures in Chicago. Next, you need to inform your employees about what to do in light of the situation. Should they continue to use the provider until you have a replacement? What are your expectations for a transition? How should they deal with customer questions? Do they still have to talk to the seller? Ultimately, you need to give them a short-term game plan on what to do and how to do it until you have a long-term strategy. When a company goes bankrupt, an independent third party takes control in order to help that company pay off its debts and determine the right course of action. Liquidation completes the affairs of a company and involves the sale of all assets before a company is completely dissolved. In many cases, a business administration will end in liquidation. You end up thinking you`re holding the impact of COVID-19 on your business in your hands, and then you receive a dreaded call that ruins your day.
One of your suppliers won`t make it. And maybe it`s a supplier that`s critical to your business operations, or a company around which you`ve built an entire offering. Bottom line: If they leave the company, it will affect your business and it will require a response. So what do you do? You do what you do best. You create a plan. Also note that we have said that the company in question must be a covered travel provider. This is due to another condition: for losses to be covered, your travel provider must have been included in our list of covered suppliers by the effective date of your plan. We cover many popular travel providers, but be sure to check the list to see which companies are on it – remember that the list may change. If you need to switch providers suddenly and with little notice, there is a chance that your new provider will increase costs. They would probably do the same if the situation were reversed. But you may not have the money on hand to cover the extra costs.
Stricter rules for individual debtors. However, let`s say your customer is not a business. Thanks to the new bankruptcy law, private bankruptcy is a slightly different ball game than it used to be. If your client is a consumer – as opposed to a registered business – they may not be entitled to chapter 7 bankruptcy. The new law provides for a « means test » to determine which persons are « worthy of release » in Chapter 7. For example, many companies that depend on certain software vendors require vendors to trust their source code, she says. The reason: companies could have access to the code if sellers filed for bankruptcy. Also make sure that you have the right to terminate a contract if a supplier is going through a crisis and to find an alternative if necessary. Before taking any action in response to these scenarios, be sure to consult with your organization`s legal team and carefully review your initial contract with the vendor.
That said, you should always check the terms and exclusions of your plan to make sure you know what`s covered and what`s not. (Don`t be intimidated! Our handy guide to understanding the details of your travel insurance is a great place to start.) The above is only intended to provide a brief introduction to the general steps a company should take in the event that a supplier seeks bankruptcy protection. .