How do I check a janitorial firm’s supply purchasing arrangements?
Ask for a list of every supplier, with recent invoices, payment terms and any written agreements. Find out which client contracts include supplies and which bill them separately, how price rises are passed on, and whether one vendor supplies most of the chemicals, paper goods and equipment.
Begin with the money flow. Take recent supplier invoices and match them to client contracts. In some contracts, supplies are included in a flat charge, so the cleaner absorbs any price rise. In others, they are billed on top. Knowing which is which shows how exposed the business is when costs go up.
Read the supplier terms. Look for credit limits, volume commitments, pricing promises, and any account in the owner’s personal name. Ask whether delivery is reliable and whether the supplier lends dispensers or equipment that must be returned if the account closes.
Then consider concentration. A firm that buys nearly everything from one vendor depends on that vendor’s service and pricing. Ask whether alternates have been tried and whether the crew would accept different products. Some clients specify products for health or site reasons, and changing them needs their approval. Finally, look at waste and storage. Ask how supplies are counted, who has access, and whether shrinkage is tracked. Your accountant can check whether supply costs in the books look steady. Ask also whether anyone pays for supplies personally and gets repaid, since that hides true costs.
Key takeaways
- Match supplier invoices to client contracts and see who bears price rises.
- Read supplier terms, credit limits and any account held personally.
- Check whether one vendor supplies most of the products.
- Ask how supplies are stored, counted and controlled.
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Sources
This answer is checked against primary sources. Links were last confirmed on the dates shown.
- 01Business Development Bank of CanadaGovernmentHow to diversify your supply chain
- 02Business Development Bank of CanadaGovernmentHow to conduct due diligence when buying a business
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