One of the questions I am asked frequently is this: "If financial
statements are so useful, why don't we request them from every customer?"
I think the answers to this question include:
As a practical matter, you can't get this information from every
customer. For example, creditors in certain industries rarely [if
ever] request financial statements from customers. If you do, you
will be seen as the oddball. This could be a source of major friction
between you, the customer, the salesrep, and even your company's
Requesting financial statements is not without risk. A small number
of customers will react in unexpected ways to what otherwise is a
Privately held companies are less likely to provide financial
data to individual creditors... unless those creditors are owed a
substantial amount of money.
Many privately held companies only only provide financial information
to Dun and Bradstreet®. Why? Because it cuts down on the number
of times they have to send this information to potential suppliers,
business partners and customers.
Unsecured creditors often do not have the leverage needed to "extract" financial
data from privately held customers.
In a highly competitive industry, your management may be reluctant
to allow such requests to go through.
If you request financial information, then:
Make your request appear routine.
Request updated data at least once a year. Outdated financial statements
may be worse than having no financial visibility.
Always request a Balance Sheet, an Income Statement, a Cash Flow
Statement and Notes to the Financial Statements. You will not always
receive everything on your wish list, but you should ask anyway.