Most, if not all, RFPs have an evaluative criteria called Corporate Profile. Generally the response contains marketing brochures listing awards, years in business, number of employees. For large projects, or partnerships, buyers will request financial statements to 'verify' a company has longevity. This becomes a sore spot, where many privately held vendors refuse to disclose their financial situation. I question whether we are asking for and assessing the right information?
The buying organization needs to know a couple of things to reduce the risk of working with a vendor on a large scale. The buying organization needs to know its vendor is going to be around for the project and to support it for years to come; that this vendor has the ability to pay its subcontractors and employees (avoiding 3rd party claims against the buying organization). As well, the buying organization needs to know their business isn't going to 'overwhelm' the vendor and sink it. A large contract means the vendor will have startup costs for the project, AND will need to be liquid enough to handle the 30+day payment cycle.
One example that makes me question the practice was an equipment leasing contract awarded to a fairly large firm. Accountants reviewed the financial statements submitted to the RFP, and stated they were solid. One year later, the firm was bankrupt leaving the buying organization scrambling for a replacement service provider.
Audited financial statements are historical documents - showing the position at a specific point in time, and when responding to an RFP, these could be months or nearly a year out of date. Without context, it may not provide enough information to assess the risk of working with this firm. That's where further probing questions (much like that of a banker or investor) would be useful. Just asking for the size of the firm, and years in business are not enough in this ever-changing economic climate.
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