Greek Debt Crisis - Issues for Supply Chain?

This Spend Matter blog discusses the effect of the Greek Debt crisis, what it means for supply chains and how it might effect those that do business with Greece. Spend Matters gives some brief observations on Greece exiting the Euro and some thoughts how this might have an effect on on supplier payments, validity of letters of credit and the risk of doing business with Greek companies and institutions.

Peter Smith, chief research officer and managing director for Spend Matters UK/Europe and Public Spend Matters Europe, points out, so many questions remain. Some suppliers for the Greek government may have already been going without payment for months at this point. Yet he still wonders how these suppliers will be paid in the future, especially if Greece exits the Euro. Peter asks, “Will they then get paid in ‘New Drachmas?’”; and, if this occurs, what conversion rate is used to determine payment?

Gert van der Heijden, editor for Spend Matters Netherlands, also said that what happens next and how much it impacts the procurement world is dependent on whether Greece leaves the Euro. If it does, there will no doubt be consequences for supplier contracts and payment. Like Peter, Gert wonders if past-due payments will be fulfilled in Euros or Drachmas. If he had to guess, though, Gert is leaning toward the Euro. Another side effect of Greece leaving the Euro: letters of credit and other guarantees of Greek banks may no longer be valid.

Will Suppliers Keep Doing Business with Greece? ....Would you continue supplying goods to a government that’s broke? Due to the uncertainty that companies that work with Greece will be paid, some suppliers are likely to cease working with the country. To read the full article.

In a further article in spend matters they discuss what part could Public Procurement play a role in resolving Greece's debt problems.