Timely checks reduce procurement risk*

As councils strive to do more with less, procurement is playing an increasingly important role.

While larger local authorities may have enough procurement expertise and experience, smaller councils recognise that shifting to online procurement and turning to technology can help to make their dollar go further.

But as any glance at the daily press reveals, local government procurement is also expected to address risk and shield local authorities from a range of threats – from fraud to supplier collapse.
Just as technology has replaced some of the ‘grunt work’ in the tender process itself, information is becoming an essential weapon in the battle against risk. Enlightened corporate and public sector buyers are increasingly looking beyond the offer and attempting to develop as much understanding as possible about suppliers – before making them a part of their supply chain.

One way information is being used is for assessing the financial viability of potential suppliers. Depending on the value of the contract and its strategic importance, assessments can range from running quick checks using online credit databases and insolvency reports to full-blown forensic accounting examinations of potential suppliers.

With these checks and balances readily available, there is no excuse for risk not to be addressed during the procurement process.
For low-value contracts, it may be worth vetting the shortlisted bidders before selecting a winner. But where the contract is vital and high value, it should be incumbent on the buyer to take responsibility by commissioning an independent financial viability assessment of their chosen supplier before signing the final contract. Conducted by experienced, qualified accountants, such assessments can extend to include ongoing financial monitoring, thereby providing an early warning of looming financial stress.

TenderLink, one of the first in Australasia to realise the potential of online tendering, is now the only e-procurement provider to offer a thorough and comprehensive financial viability assessment of suppliers – both before the contract is awarded, and on an ongoing basis. And that’s important, because things change fast in the business world and yesterday’s successes are no guarantee of tomorrow’s performance.

Rob Cook is Marketing Manager of TenderLink, one of Australasia’s largest web-based procurement networks.
*Copy supplied by TenderLink