One area not usually considered around your business ventures is the financial health of the JV partner, teaming partner, strategic partner, or any other type of business partner or relationship which might occur in a business venture. It turns out such an oversight may have some significant ramifications for an accurate picture of a business venture partner. The financial health of a business venture partner is not only a key metric but also a key tool that allows a more robust assessment prior to contract signing and in managing See more +
One area not usually considered around your business ventures is the financial health of the JV partner, teaming partner, strategic partner, or any other type of business partner or relationship which might occur in a business venture. It turns out such an oversight may have some significant ramifications for an accurate picture of a business venture partner. The financial health of a business venture partner is not only a key metric but also a key tool that allows a more robust assessment prior to contract signing and in managing the relationship after the contract has been signed.
A business venture partner in a weakened financial position can come back to damage your business in various ways. A company under financial strain is more susceptible to cutting corners to obtain business. You can almost begin to see the fraud triangle forming at this point and a rationalization for committing an FCPA violation forming in the mind of a business venture partner.
Continuous improvement through monitoring ongoing financial health is a tool where technological solutions can impact. Understanding the financial viability of third parties can help the compliance practitioner meet the DOJ requirement to operationalize a compliance program more fully. It can also lead to more and better operational stability and, with that ever-sought increase in corporate profitability. As compliance moves into the business process, this type of review should become part of your compliance toolkit going forward.
Three key takeaways:
1. What is the financial health of your business venture partners? Do you even know?
2. Poor financial results can open a business venture partner to engaging in risky behavior.
3. Financial health monitoring is key for monitoring business venture partners. See less -
