Monday Morning Monologue: Are Your Assets Tagged as Your Property?
The bankruptcy at Standard Register reminded me of a very important but sometimes forgotten task.
Tag your assets.
This is often forgotten until it’s too late. In the unfortunate event one of your suppliers falls on hard financial times, it’s important to prove an asset is yours. If not, the bank can use it to pay off whatever debt the supplier owes. So, if you have a $50,000 injection mold at a supplier and it’s not tagged as yours, it can be sold for the scrap value. There are certainly other ways to prove ownership, but that typically involves quite a bit of time when you don’t have much of it.
The ripple effect is huge. That tool was needed to make a custom part to complete an assembly you sell to your customer. Now you don’t have that part... you can’t sell to your customer…. all because the tool was not marked as your property. How much revenue will be lost while engineering scrambles to figure out a different way?
Please be sure adding tags to tools are part of your product development process. If not, you likely won’t realize it until it’s too late.
A way to mitigate the risk of a supplier in danger of bankruptcy is to subscribe to Dunn and Bradstreet, Creditsafe, or another credit monitoring company. These companies provide insight into how your suppliers are performing. Are they paying their suppliers on time? Do they owe back taxes? Have they been sued? These can be red flags that can lead to a productive discussion and help you decide if action needs to be taken prior to a potential bankruptcy.
Have a great week!