Here’s an extract from a letter from a leading international ship management company sent to all of its suppliers,
“Whilst in the midst of the current economic climate, we feel it appropriate to remind all suppliers that <we> act as agents only, the settlement of invoices is funded solely by our principals. Whilst every effort is made to ensure timely payment, this cannot always be guaranteed. In the case of any doubt or concerns with regards to solvency or credit reliability, suppliers will be guided to make independent enquiries and credit checks of our principals in determining supply and credit issues”.
Upon first reading, the above statement is shocking. It seems to be saying, “Don’t trust us”! Surely that can’t be right? In fact the ship manager is being remarkably straight with its suppliers by spelling out what those three little words, “as agents only” mean in reality. For all ship managers, their duty is to their principals, the ship owners and fleet operators on whose behalf they act. They owe no such duty to suppliers.
When the agent (the ship manager) knows that a principal (ship owner) is in financial difficulty, the agent may not breach confidentiality by disclosing that information to third parties (suppliers). The effect of this can be that the ship manager continues to place orders with suppliers, even though the principal lacks the funds to make due payment. The above ship manager is to be commended for being open with its suppliers and advising them how best to protect themselves.
Marine Debt Management provides tailored credit reports on the business reputation and financial standing of ship owners, operators and managers world-wide. Please contact us now to find out how we can help your company reduce credit risk and maximise profitable sales.
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