An auto industry association surveyed key suppliers to Tesla recently and found that most are becoming very concerned that Tesla has become a financial risk to their business.

The survey uncovered several stories that shine a light on Tesla’s cash flow problem and how they’re trying to use suppliers as a source of financing. These include:

1. Asking for large price reductions – over 10% OR accept 120 day payment terms
2. Asking for extended payment terms
3. Seeking retroactive rebates
4. Finally, my favorite… Tesla stopped paying one key supplier all together last spring, causing the supplier to fear “insolvency for his own company if he continues to ship products to Tesla and not get paid.” Duh!

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Here’s the point: these suppliers are late to the party. Credit insurance companies like mine (Coface) warned our clients months ago that Tesla’s financial condition was deteriorating. For them, the problem was avoided because of the forward-looking financial nature of their credit insurance policy.

The other key point: this pattern repeats itself regularly. Suppliers sell to a customer without realizing the risk until it’s too late.

Would you like to avoid putting your business at financial risk? Visit https://www.tateparker.com/ to learn how before you find yourself being asked for extended terms, extreme discounts with the threat of longer terms, no payments at all… you get the picture.