Hitting customers and suppliers equally hard
The companies surveyed have already been keeping a close eye on both their customers and their supply chain. And with good reason, as over half had seen a deterioration in creditworthiness of customers (nearly 60% in Europe) whilst over half said that some key customers are in distress, and that there was an increase in the time lag between customer order and cash collection.
Companies have adapted their strategies to fit with this new environment with nearly three quarters showing an increased focus on key accounts and over 40% developing new products. A third said that fears about existing customers meant they had broadened their customer basis and a third said they had terminated contracts with customers they perceived as high risk.
In terms of suppliers, respondents were split equally between two very different strategies. Half the companies surveyed have narrowed their supplier base to obtain more favourable prices or terms whilst the other half have broadened the supplier base to reduce the impact of the failure of a key supplier.
The majority of companies are already communicating more proactively with suppliers, half were negotiating payment terms with suppliers more frequently and over a quarter of companies said key suppliers were experiencing financial distress.
“Now is not the time to for companies to be conservative or inactive. Research from previous recessions has shown that the companies who will emerge the strongest will be those that clearly identified opportunities to sustain their development during the downturn and that took strategic decisions that distinguished them from their competitors. A period or crisis can provide an opportunity to drive change more rapidly and effectively than a period of prosperity,” Christian Mouillon, Markets leader, Ernst & Young EMEIA commented.
Companies have adapted their strategies to fit with this new environment with nearly three quarters showing an increased focus on key accounts and over 40% developing new products. A third said that fears about existing customers meant they had broadened their customer basis and a third said they had terminated contracts with customers they perceived as high risk.
In terms of suppliers, respondents were split equally between two very different strategies. Half the companies surveyed have narrowed their supplier base to obtain more favourable prices or terms whilst the other half have broadened the supplier base to reduce the impact of the failure of a key supplier.
The majority of companies are already communicating more proactively with suppliers, half were negotiating payment terms with suppliers more frequently and over a quarter of companies said key suppliers were experiencing financial distress.
“Now is not the time to for companies to be conservative or inactive. Research from previous recessions has shown that the companies who will emerge the strongest will be those that clearly identified opportunities to sustain their development during the downturn and that took strategic decisions that distinguished them from their competitors. A period or crisis can provide an opportunity to drive change more rapidly and effectively than a period of prosperity,” Christian Mouillon, Markets leader, Ernst & Young EMEIA commented.