Being in a major manufacturer’s supply chain should strengthen your business, not make it fragile

When your business supplies components to a major manufacturer, the relationship can feel both promising and precarious. The orders are large, the prestige is real and the partnership can transform your balance sheet. But being part of a bigger firm's supply chain means your fortunes are inevitably tied to theirs and that can bring risk. The challenge is to seize the opportunity without exposing your business to forces outside your control.

We often see a medium-sized client company winning a significant contract, scaling up to meet demand and soon finding that most of its revenue flows from one customer. It's an enviable position until that customer delays payments, changes production schedules, or a cyber incident halts orders overnight. The result can be strained cashflow, idle stock and mounting pressure on working capital. But with foresight and the right safeguards, those risks can be contained.

It's good practice to apply the same due diligence to customers as you would to suppliers. Run regular credit checks, look for changes in their financial health, ask questions about continuity planning and cyber resilience. These conversations don't show mistrust, they show willingness to build a stable, professional partnership.

Well-structured contracts can also protect your position. Staged payments, deposits and clear termination clauses prevent you from financing your customer's production cycle. Realistic payment terms along with obligations around data security and cyber standards are now essential in any modern supply agreement.

Financial resilience is equally important. Trade credit insurance and invoice finance can safeguard cashflow and protect against late or missed payments. Most of all, diversify. No customer should account for so much of your turnover that their slowdown becomes your crisis.

Resilience isn't built overnight, but ongoing actions can make a difference. You might well start by reviewing your top customer accounts, updating credit limits and tightening contract terms. Then look at your exposure policies, insurance options and business continuity planning.

Winning a place in a major manufacturer's supply chain can be transformative, but it should strengthen your business, not make it fragile. With prudent financial planning, active contract management and a proactive approach to risk, you can benefit from working with large customers while staying in control of your own stability.

If your business supplies to a large manufacturer, make sure your contract, cashflow and cyber resilience are as strong as your products. Our team can help you review your customer exposure, help strengthen your financial protections and build a plan for long-term stability, no matter what happens further up the chain.

To make sure your success doesn't depend on someone else's fortunes, call us today on 020 7935 3793