Procurement glossary · Qualification and compliance
Economic and financial standing
The test of whether a supplier is financially robust enough for the contract. It typically looks at turnover against contract value, filed accounts, and a credit or ratio assessment. It is usually pass or fail, it is assessed on filed figures rather than management accounts, and it cannot be argued around.
Also called Financial standing, Financial capacity.
What it means in practice
Authorities commonly set a minimum turnover, frequently at around twice the annual contract value, and run a financial assessment on your filed accounts. Some use a credit scoring service, some apply their own ratios, and the method is normally published.
The figures used are the ones at Companies House. A strong current year that has not been filed does not help, and a weak filed year cannot be explained away in the response box. This is why financial standing is a planning matter measured in months rather than a drafting matter measured in days.
There are legitimate routes for a supplier that falls short. A parent company guarantee, a consortium or joint venture, or bidding a smaller lot are all recognised. Each has to be arranged in advance and evidenced, and each changes what else you must submit.
Where suppliers get caught
Discovering the turnover threshold after deciding to bid. It is published, it is usually in the notice or the selection documents, and it takes two minutes to check. Suppliers regularly write a full submission for a contract they were never financially eligible for.
Common questions
What turnover do I need to bid for a public contract?
It varies by procurement and is published. A common benchmark is roughly twice the annual contract value, but check the specific requirement rather than assuming, because authorities set it against the risk of the particular contract.
What if our accounts are weak?
A parent company guarantee, a consortium bid or targeting a smaller lot are the recognised routes. All three need arranging before you bid, and all three change the evidence you have to supply, so they are planning decisions rather than drafting ones.
Related terms
If a tender in front of you turns on this, send us the documents and the deadline and we will tell you honestly whether it is worth bidding. Call 020 3668 5488, or read the rest of the UK procurement glossary.