A supplier signs a three-year agreement. Pricing is fixed, volumes are established, delivery requirements are clear. For the buyer, much of the uncertainty appears to be gone. But the supplier still has to operate for those three years, and its electricity price can rise, fuel and freight costs can change, insurance can become more expensive, and skilled labor can become harder to find. The contract fixes what the buyer pays without fixing what the supplier spends, and that distinction is becoming harder to ignore as supplier risk itself starts diverging from how buyers and suppliers each experience it.
RapidRatings' 2026 Annual Risk Survey, drawn from over 200 global suppliers and procurement and risk professionals, found that 66% of enterprise buyers rated the supply environment high or very high risk in 2026, up from 62% the year before, while only 35% of suppliers reported experiencing prolonged disruption themselves. Rising costs hit 85% of respondents in 2025. Only 15% of enterprises fully integrate supplier financial health into payment terms or working capital decisions. Most procurement organizations are still watching for operational failure, not financial strain, and by the time strain becomes operational, the warning window has usually closed.
A Supplier Can Look Fine Right Up Until It Isn't
The credit markets that finance many suppliers are already flashing that warning. A Financial Times analysis, corroborated by bond-data provider Solve, found that loans placed on non-accrual status by the 20 largest publicly traded business development companies climbed to a median 2.8% of cost in the second quarter of 2026, up from 2.0% at the end of March, pushing troubled private-credit loans back to levels last seen in 2017. Fitch Ratings separately tracked the U.S. private credit default rate at 6.1% for the twelve months through July, a record high. Much of that stress traces back to companies financed in 2020 and 2021, when debt was cheap and private equity firms were acquiring aggressively; the leverage that looked manageable then is far more expensive to carry now.
A supplier under that kind of pressure can still be delivering on time, with good quality and adequate capacity, while quietly canceling a planned expansion, reducing inventory, deferring maintenance and leaving open positions unfilled. The supplier is still performing. Its margin for error is shrinking. Most supplier-risk systems are built to catch deterioration after it becomes visible operationally, through slipping delivery or falling quality, but financial pressure typically shows up much earlier than that.
What This Looks Like When It Plays Out
Pretium Packaging, the Missouri-based manufacturer of rigid plastic containers, a private-equity-owned supplier to food, beverage, healthcare and personal-care brands, restructured its first-lien debt in 2023 and repurchased second-lien debt at a discount in 2024, both quiet financial maneuvers that kept the company current on its obligations to customers and vendors. By January 2026, the strain had become unsustainable: Pretium filed a prepackaged Chapter 11 to cut more than $900 million from $1.836 billion in funded debt, a process the company said was designed specifically to keep serving customers without interruption throughout. The restructuring itself was orderly, and the company continued shipping. But two years of balance-sheet stress preceded the filing, years in which a customer relying only on delivery performance and price stability would have had no obvious signal that anything had changed.
The Lowest Price Can Carry the Most Risk
This changes how procurement should think about competitive pricing. A supplier that raises its price 4% may immediately attract scrutiny. Another that agrees to hold pricing can look like the stronger commercial partner, and it may be. Or it may simply be absorbing cost increases it cannot sustain indefinitely, using cash that would otherwise fund equipment replacement, capacity investment or the inventory buffers that make a supplier reliable in the first place. Two suppliers can offer the same component at the same price while carrying very different financial exposure, and the purchase order does not show the difference.
That distinction matters most when replacement options are limited. If a company supplies a commodity available from ten other sources, the financial risk is manageable. If it controls a specialized process, a constrained component or scarce production capacity, the exposure is very different, a dynamic that mirrors how energy buyers have had to rethink counterparty risk as their own long-term suppliers came under financial pressure that had nothing to do with contract performance on paper.
Procurement Has Traditionally Asked a Different Question
Supplier financial assessments are not new. Procurement organizations already monitor credit quality, concentration risk, geographic exposure and continuity planning, largely to answer whether a critical supplier is financially stable enough to remain in business. Cost volatility adds another layer to that question: it is no longer only whether the supplier can survive, but whether it can sustainably perform under the economics of the agreement it actually signed. That requires asking how exposed a supplier is to electricity and fuel prices, how much of its cost base is tied to commodities, whether it has hedged those exposures, and what happens when the margin between its input costs and the contracted price disappears entirely, questions that sit alongside the kind of documented oversight buyers are already being expected to hold for other categories of supplier risk.
Contract Structure Puts the Risk in Different Places
Some businesses are addressing the problem before the next cost shock arrives by changing the contracts themselves. Vendors are increasingly inserting inflation-indexed price adjustments into service agreements, a practice regional Federal Reserve contacts have described as previously uncommon, and fuel surcharges are becoming more widespread even as the ability to pass through higher costs varies from company to company. That suggests suppliers are not simply choosing between raising prices and absorbing costs; they are looking for ways to change how cost risk is allocated in the first place.
None of these structures is inherently better. A fixed price may carry a higher initial premium because the supplier is assuming volatility. An indexed agreement may appear less certain but leave the supplier with a more sustainable economic model. A surcharge provision transfers risk directly to the buyer. What matters is that they put the risk in different places, and a buyer who cannot see where that risk is sitting is not actually managing it. That gap is easy to miss even with good supplier data, since visibility into a supplier's operations and visibility into its financial durability are two different things entirely.
A Supplier's Price Is Only Part of the Exposure
Procurement teams have spent years becoming better at identifying whether suppliers can deliver the right product, at the right quality, at the right time. The next layer is understanding whether the price supporting that delivery is durable. That does not mean buyers should accept every supplier increase or abandon fixed-price contracts. It means a supplier's willingness to hold a price should not automatically be treated as evidence that the underlying cost risk has disappeared. Sometimes the supplier has managed that risk well. Sometimes the contract quietly transfers it back to the buyer through an escalation clause. And sometimes the supplier is carrying it alone, on a balance sheet the buyer has never asked to see. Knowing which of those three situations applies may matter as much as the price itself, because the real procurement risk is rarely that a supplier asks for more money. It is discovering, too late, that the price it promised was never sustainable.
