Q. Factors about transfer pricing?
- Does the supplier have a solid track record for delivery e.g. references from other satisfied customers in terms of the quality of service they provide should be sought.
- Financially stability of supplier should be investigated e.g. obtain previous sets of accounts and credit ratings.
- Does the supplier have the resources required to cope with peak periods when demand for their product or service may be high.
- Will the supplier be increasing prices above their quoted price in long-term?
- Good service level agreement (SLA) for a minimum standard of service expected and penalties for non-performance.
- Can the internal seller find external work to fill spare capacity caused by a reduction of internal demand, if the buyer goes elsewhere?