A major bank in South Africa has a large volume of suppliers and recognised that selecting vendors that are suffering from financial stress can be catastrophic. The bank realised the risk to their business activities, reputational damage, loss of business, potential customer litigations, and the costs to replace the failed vendor. The bank had a requirement to assess its vendor’s financial stability to manage this risk but did not have the in-house capacity to do so.
To be complete a program of vendor financial health checks, which included:
- Select vendors that posed the highest risk to the bank if suffered financial stress.
- A detailed assessment of selected vendors’ financial statements.
- Producing the Financial Health Check Reports (‘FinCon’).
- The FinCon Reports provided the bank with a rating to determine whether any action should be taken with susceptible vendors.
- The FinCon reports were included as standard process in tenders and on-going risk management of key vendors.
Caliba delivered the following outcome for the client:
- Comprehensive Financial Health Check Reports on hundreds of the bank’s suppliers.
- Procurement department relieved of ‘heavy lifting’ associated with the financial analysis of suppliers.
- A new tender process that now includes the assessment of Tenderers’ financial position in scoring responses.
- A new risk management process for key suppliers including on-going vendor financial stability assessments.
- All reports delivered within three working days.