Sharing financial and trade relationship information with various credit agencies is an important part of the buy-sell process and a way for companies to strengthen their business and credit profiles. Both suppliers and customers can then evaluate trading partners and have trust in the products or services offered.
It is also important to share accounts receivable and trade experience information, which contribute to and promote transparency. Of course, not all information may be made available—the level of transparency can vary depending on the nature of the relationship. London Fruit has a trial period with new customers, while Ampco’s transparency mirrors the level of economic exposure or financial risk.
Range of Benefits
True business-to-business partnerships call for substantial transparency between organizations. If done right, it generates trust and becomes a win-win for both parties, enabling each to go about their business with solid support and a return on their relationship investment. A lack of openness, on the other hand, can lead to a denial of credit or require prepayment until financial stability can be proven and confidence earned.
Transparency extends to the loading and shipping of product as well. London Fruit shares real-time tracking information, so customers can follow a load’s progress, along with temperature readings during transport. This helps if any shipping issues arise, leading to higher quality assurance standards and fewer claims down the road. Suppliers can also log into London Fruit’s network to see how their product is selling.
A top benefit is food safety: in this instance, transparency and traceability go hand in hand, enabling partners to pinpoint problems within the supply chain. In worst-case scenarios, if a recall is necessary, shippers, receivers, and retailers can have current, reliable information at their fingertips.
With the latest Food Safety Modernization Act (FSMA) rules, there is more of an impetus to be transparent than ever before. The government and consumers are demanding a full complement of information from field to fork.
London Fruit requires business contacts to share third-party certificates and full audit results to better assess risk profiles. This also includes foreign suppliers, to ensure all imports meet both their own and FSMA’s more stringent protocols.
While this level of oversight calls for more involvement and monetary outlay—including sending personnel to visit foreign suppliers, Gonzalez stresses that London Fruit will do whatever is necessary to ensure food safety procedures are implemented and followed. Fortunately, the growers who supply the company with its mangos, limes, and avocados are already in compliance with handling practices and food safety rules, he reports.
To Be or Not to Be
While being transparent undoubtedly has its benefits, and has become less of a choice in today’s digital environment, is there such a thing as being too transparent? And if a business is doing well, some would say, why not share various types of information—financial or otherwise—with the world? But what if a business is struggling and reluctant to share?
