Interaction with problematic counterparties: how to establish effective cooperation

Practice shows that the financial well-being of a business largely depends on how properly the company has established a system of interaction with its counterparties. This applies not only to buyers/customers but also to suppliers/contractors. In particular, delayed payment by a buyer for delivered goods (or completed work), where the company has already incurred actual expenses, creates financial risks. Likewise, untimely deliveries may cause a “cascading” breach by the company of its obligations to its customers, resulting in reputational damage and losses in the form of penalty sanctions. All of this may trigger issues ranging from local cash flow disruptions to a large-scale financial collapse and a pre-bankruptcy condition.

This article will address the following aspects of the issue:

• whom we refer to as “problematic” counterparties;
• how the system of counterparty control and interaction is structured;
• methods for risk mitigation.