Government tender

hairyslug

I have been approached by a government dept to see if I would like to tender for a fairly large tender (would equate to what we estimate would be 25% of our forecasted turnover)

We are in the early stages of preparing for this but I have a few questions. If we say no now, would that affect us in the future going for tenders. (I have some concerns over the ability to fulfil their order in time while being able to keep up with my current work load)

Financially, we also have concerns, we run a very tight ship with cash flow (I'm a relatively new company) Does anyone have experience with how gov depts are with payment (do they drag their heels) and would my LEO look at my case to help with finance.

I'm sure there's a lot more I'm not even thinking about, when we started, something like this would have been a dream but the thought of it is a little overwhelming.

Gloomtastic!

You’d be mad to turn this opportunity down!!

I’ve never had a problem with payment terms from government agencies- you need to set up your credit processes to issue invoices, check that it’s been recieved and processed to your agreed credit terms. Follow these procedures vigorously every month to ensure prompt payment.

The major concern you’ll have is the 25% of turnover. It’s great for your new business but if you lose the contract in the future it will probably mean your whole business is doomed.

Sit down with your accountant and/or business advisor and discuss what you’ll need to do to grow your business around this new contract. You need to bring the size of this contract to below 20% but ideally 10% or less of turnover.

It’s a great opportunity to grow your business. Do it, review it, change it!!!

thomas01

Is it construction works you are tendering? I've been involved on many public construction projects. The payment terms are agreed in advance and I've rarely seen an issue.

What can sometimes happen, is that a department may give a premature instruction to proceed and then you are left waiting for payment while they raise a P.O. Don't start without a P.O. number, as this is your security that money has been reserved for you.

hairyslug

It's for the supply of a large number of products (it's a bulk, one off shipment) While I can source them all and have them in a relatively short amount of time, our main issue now appears to be cash flow. I'll be talking to my LEO to see if she can help.

Is it normal for a dept to contact people directly to ask about tendering. I can't see any mention of it on the etender site.

andrewfaulk

hairyslug wrote: »

It's for the supply of a large number of products (it's a bulk, one off shipment) While I can source them all and have them in a relatively short amount of time, our main issue now appears to be cash flow. I'll be talking to my LEO to see if she can help.

Is it normal for a dept to contact people directly to ask about tendering. I can't see any mention of it on the etender site.

Do you manufacture or just source the products?

If the latter, maybe you could talk to your suppliers and see if they would be willing to extend your credit terms to get you over the hump between ordering the payment and getting paid for the tender.. Not sure how strong your relationship with your suppliers is but I’m sure if you explained the situation to them and that this contract had the potential for you to increase your turnover/ order sizes some may be interested