Professionals who go from one deadline to the next, such as traders and journalists, say there’s nothing quite like the buzz of rushing to beat the bell or the print cut-off. But we say there is — and it’s called submitting a tender document. Business owners and procurement managers know the mad rush of filling, gathering, printing, binding, signing and possibly even driving in the emergency lane with your hazard lights on to get that document in to your new hopeful client on time.
With everything you invest into bidding for a large tender, there’s a feeling of utter elation when it’s awarded to your company, and of bitter disappointment when it’s not. If your company has been exposed to that let-down more often than you would like, then it’s time to start enlisting the help of a top-notch financial manager. Here are three ways that your financial manager can help increase your chances of winning tenders.
1. Your financial manager can identify how best to interplay between price, quality and B-BBEE score. Most procurement managers take three major considerations into account:
a. They’re looking at how much your company will charge for its goods or services;
b. They’re looking at the “quality” of the services you provide. This includes the actual quality of products sold, but it also includes things like efficiency, turnaround time, distribution channels, delivery time, after-sales support, warranties on products, and so forth.
c. In South Africa, they’re looking increasingly at your company’s B-BBEE score. In addition to what your overall B-BBEE rating is, factors such as black ownership, black female ownership and the size of your business (in this case, small is good) will have an additional impact on their own B-BBEE score. This can become fairly complex. The company with the highest B-BBEE rating might not always receive preference. If your new client needs points for procuring from small businesses, for example, then a smaller supplier with a slightly lower B-BBEE score may win the day.
Your financial manager will be able to use analytical methods to try and determine which of these factors is most important to your prospective client. For example, if they are facing record sales slumps, chances are they are looking for the cheapest supplier. If they are looking to deepen their market share and strengthen their own brand, then factors of quality become very important. And, if they are doing business with government or any large government-supplying organisation, chances are your B-BBEE score is going to be paramount.
2. Your financial manager understands the PPPFA. At this point you might be wondering: ‘The what?’ The Preferential Procurement Policy Framework Act. It’s the legislation that outlines how government departments — including national, provincial and local – are supposed to appoint their suppliers. The PPPFA provides a weighting system, giving more recognition to companies with better B-BBEE scores and higher levels of black ownership, and a lesser amount of recognition to price. If your company is tendering to any sort of government entity, it’s vital to know and understand how these weightings are structured to best position your company for success.
3. Your financial manager knows the competition. You know who your competitors are, and that’s an important starting point. With some research, your financial manager can take that information and begin to identify your competitors’ pricing strategies.
If you can reasonably predict where your competitors will price themselves, you are better able to position your own price pitch competitively. If you can come in just a fraction cheaper, and offer the same end-to-end services as your competitors, your chances of winning the tender are that much higher.
When it comes to bidding for tenders and contracts, every company wants to put their best foot forward. Make sure you have a financial manager who can help you determine which foot that is. Contact The Finance Team to meet one of our highly experienced, qualified finance professionals today.