Suppliers and contractors are susceptible to financial stress, particularly during times of economic downturns or through poor management decisions. If they can no longer operate and become insolvent, this can have a significant effect on their customers.
If a major supplier to a business becomes insolvent, this may prevent their customers from operating themselves with disastrous outcomes. Checking the financial health of suppliers during the initial tender process and then on an on-going basis manages this risk. Businesses have time to take action if a major supplier is showing signs of becoming financially stressed, before its too late.