Trust in commercial relationships

“Trust me, I’m looking after your best interests.” A noble sentiment indeed, but how do you know whether your trust is well-placed or not? Does your account manager view the world through a similar or different lens?

Well, you don’t know for sure where the trust lies in a commercial relationship until you test it. There are pros and cons involved in testing the strength of any relationship: it might make your life easier; it might make it harder. One thing which you can be fairly certain of is that it will precipitate a change in the relationship and both parties will learn more about each other, particularly if done in a structured manner.

How do you test a relationship in the commercial world? Often it involves engaging a third party of some kind.

How do you test a relationship in the commercial world? Often it involves engaging a third party of some kind. When it is the financial management aspects of the relationship that are under the spotlight, a contract compliance auditor will be engaged to look at the data and fact of how the buyer and supplier actually conduct their business compared to what is written in the contract between them. The health and levels of trust in the wider commercial relationship are often reviewed at the same time. You might be surprised to discover that how the other party has behaved towards you can easily transfer across into how you then behave towards them. How often has your perception of the other party changed after being paid late or being charged over the odds for that special project?

If you start to feel this way, what do you do? Keep quiet and hope it will not happen again or raise it with the other party and agree what is going to be done differently next time?

In practice the answer may boil down to the potential consequences for you and your counterpart personally and whether or not you feel comfortable having potentially difficult conversations directly.

Fear of negative consequences can seep in to your psyche. Trust your instincts and know that, even though it may be uncomfortable in the short term, you are doing the right thing for your organisation and many of your colleagues will later thank you for it. After all, it’s easier to address an issue when it is small, rather than after it has been allowed to grow into something far larger, more complex and ultimately more costly to resolve.

When potential clients ask us how frequently they should invoke their audit rights, our answer is invariably “regularly”.

When potential clients ask us how frequently they should invoke their audit rights, our answer is invariably “regularly”. The more regularly the workings of the commercial relationship are assessed, the more normal it becomes and the easier it is to address any issues before they become problematic. Over time both parties come to realise that regular contract compliance audits are a sensible, pragmatic and low-risk component of effective commercial relationship management in key areas of spend.

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