Financial Capability

A company should ensure financial capability prior to making submission of a proposal to the government. Many small companies believe that if they are equipped with the two year past performance that it should be easy to obtain a government contract. Unfortunately this is untrue, financial capability is a main factor in government agencies making award of a contract. This is one of the main reasons agencies choose larger vendors. GSA for example requires balance sheets of a company in order to ensure that your company has consistent funding. It can be somewhat of a trickle down theory, without the proper capital a business is not able to handle the requirements of the agency which depletes the performance of company and could possibly lead to the business sometimes losing the contract.

Having capital also provides the company a strong foundation in securing bank financing should a bank loan be required. Normally banks are more apt to loan to businesses with a government contract that is in progress because it proves that some financial stability is available if capital is not already present.

So ensure your role in the financial capability of your business. What do you think are strategies to ensure financial capability of your business?

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