Government Tenders: What Financial Information is Needed

Participating in government procurement can be a great way for businesses to get started or to expand their operations. Government agencies usually issue tenders for goods and services that they need, and businesses can then compete for these contracts. The procurement process is usually conducted through competitive bidding, with the selected supplier being the one that offers the most advantageous bid in terms of price, quality and delivery

Tenders are commonly used for large projects like construction contracts, operation of nursing homes, but they can also be used for smaller tasks, such as supplying office supplies, payment terminals etc. If your business is looking for new areas of growth, then you should definitely start staying informed with the latest procurement projects. Here are some reasons why you should consider tenders for your business in Singapore.

Benefits of tender opportunities in Singapore

1. Government tenders are often medium to long-term

This means that if your business is awarded a government contract, you can expect a steady stream of work over an extended period of time. This can provide your business with much-needed stability and can help you to plan for the future with confidence.

2. Government contracts can be very lucrative

Not only are government contracts usually large, but they also often come with attractive profit margins. This is because the government is typically willing to pay more for goods and services in order to ensure that they are of high quality. As such, obtaining a government contract can be a great way to boost your bottom line.

3. Increase the exposure of your business

Winning government contracts may also help improve the reputation and prestige of your business. This is especially true if you’re a small business or a start-up. This can show potential clients and investors that you’re a reliable company that can be trusted to deliver on its promises. The recognition that comes with winning tenders can also help you attract top talent to your company.

4. Good source of repeat business

Once you have established a relationship with a particular government agency as the trusted vendor, they are likely to keep coming back to you for goods and services that they need. This repeat business can help your business to grow and thrive in the long run.

What do you need to qualify for a tender?

With the above benefits in mind, you may sign up as a GeBiz Trading Partner to start browsing through available procurement opportunities through GeBiz. This portal will give you access to prospective tenders in the public sector, enabling you to prepare in advance. 

However, do note that to qualify for certain tenders, it may be necessary to have a valid Government Supplier Registration (GSR) status that substantiates your tendering capacity. This will be stated in the tender notice and documentation. Your tendering capacity will be assessed based on the: 

  • Net Tangible Asset (NTA): The sum of paid up capital, revenue reserves, preference/premium shares plus accumulated profit or less accumulated losses. The ratio of tendering capacity: NTA is 20:1.
  • Annual Turnover/Sales/Revenue: The total amount of sales produced in a year. The ratio of tendering capacity: Annual Revenue is 1:1.

For example, in order to be considered for a financial grade of S4 project worth $500,000, your company will need to have an NTA of at least $25,000 and annual revenue of $500,000. Having said that, if you do not fulfil the turnover/sales/revenue criteria under your preferred financial grade, $500,000 in this case, you can still be eligible for financial grade of S3 project worth $250,000 as long as you meet the NTA criteria and paid up capital criteria required of S3, even though you do not meet the $250,000 turnover/sales/revenue criteria for S3.

In addition, you will also need to submit accurate and complete financial statements. These can either be audited or unaudited financial statements of the last closed accounting year of 12 months. In the case of unaudited financial statements, bear in mind that it must come accompanied with a signed director’s declaration form.

For certain tenders, the party is also required to submit pro-forma financials for the first 3 years of operation in the event that the tender is awarded. This include:

  • Pro-forma Profit or Loss Statement: Estimate of revenue and expenses in the next few years, taking into consideration market factors, relevant ministry’s salary benchmarks, inflation etc.
  • Pro-forma Balance Sheet: Estimate of financial position at the end of the first 3 years. This includes forecasting the operating assets required to generate the business revenue and whether they will be funded through injection of capital or loans.
  • Pro-forma Cash Flows Statement: Estimate of the cash from operating, investing and financing activities.

Upon submission and approval, your GSR status will be valid for at least one and a half years to three years, after which a renewal is required. With that, you can then proceed to explore the latest procurement opportunities and prepare your bid proposal documents. 

Is your business ready?

Overall, the awarding of a government tender can be a significant boost to your business as it provides a guaranteed source of income and can lead to further contracts with other clients. However, before participating in a government tender, it is important to consult with an accounting advisory provider. This will ensure that you have a clear understanding of the financial requirements and commitments involved in Singapore. 

Accounting advisory services can also help you to develop a realistic budget and timeline for the project. Without forecasting this information, it may be difficult to accurately estimate the cost of the tender and to make informed decisions about whether or not to participate. In addition, an experienced advisor may provide valuable insight into the bidding process and what other companies are likely to offer. This information can help you to tailor your bid to be more competitive. 

Ultimately, consulting with an accounting advisory provider like Chartsworth before bidding will give you a better chance of success. By doing so, you can have the assurance that you are in a strong position to win the tender and deliver on the project. To get started, don’t hesitate to contact our team at Chartsworth for more information.