How to Win Procurement Bidding: An Ultimate Guide for SME.

In the competitive world of business, understanding the procurement process is a key factor for small and medium-sized enterprises (SMEs) aiming to sell their products or services. This comprehensive guide will walk you through the steps of a typical procurement process, and provide tips on how to effectively pitch your offerings, get on the supplier approved list, and navigate the purchase order, invoice, and payment process.

Understanding the Procurement Process

The procurement process is a series of steps that a company takes to acquire goods and services. This process typically includes the following stages:

• Identifying Needs: The company identifies a need for a product or service.
• Supplier Evaluation and Selection: The company evaluates potential suppliers and selects one or more to provide the needed product or service. This is where the supplier approved list comes into play.
• Approval Process: The company goes through an internal approval process to finalize the decision to purchase.
• Purchase Order: The company issues a purchase order to the selected supplier(s).
• Delivery: The supplier delivers the product or service.
• Invoice and Payment Process: The supplier sends an invoice, and the company processes the payment.
• Record Keeping: The company records the transaction for future reference and auditing purposes.

Pitching Your Product or Service

To sell your product or service to a company, you need to effectively pitch your offerings. This involves demonstrating how your product or service can meet the company's needs better than other options on the market. Your pitch should highlight the unique features and benefits of your product or service, and provide evidence to support your claims.

Getting on the Supplier Approved List

The supplier approved list is a list of suppliers that a company has vetted and approved to do business with. To get on this list, you need to meet the company's criteria for suppliers, which may include factors such as quality, reliability, price, and credit terms. You may need to go through a formal application process, which could involve providing references, demonstrating financial stability, and showing compliance with relevant regulations and standards.

Navigating the Purchase Order, Invoice, and Payment Process

Once you're on the supplier approved list, you can start receiving purchase orders from the company. A purchase order is a document that the company sends to confirm the details of the purchase, including the product or service to be provided, the quantity, the price, and the delivery date.

After delivering the product or service, you should send an invoice to the company. The invoice should include all the details of the transaction, including the purchase order number, the product or service provided, the quantity, the price, and the payment terms.

The payment process involves the company processing your invoice and making the payment according to the agreed credit terms. The credit terms specify the period within which the company must pay the invoice, typically 30, 60, or 90 days.

Understanding Payment Terms and Credit Terms

Payment terms and credit terms are crucial aspects of the procurement process that SMEs should pay close attention to. Payment terms refer to the conditions under which a seller will complete a sale. These terms specify when the payment is due, any available discounts, and any penalties for late payment.

Credit terms, on the other hand, refer to the agreement between a business and its supplier about when the payment should be made. Common credit terms include Net 30, Net 60, and Net 90, which mean that the payment is due in 30, 60, or 90 days, respectively.

As an SME, it's important to negotiate favorable payment and credit terms that align with your cash flow needs. For instance, shorter credit terms or early payment discounts can help improve your cash flow. However, be aware that offering longer credit terms or larger discounts might be necessary to win business in competitive markets.

Key Considerations for SMEs

When engaging with a company's procurement process, SMEs should pay attention to the following:

Understand the Company's Needs: 
Tailor your pitch to address the specific needs and pain points of the company. Show how your product or service provides a solution.
Compliance: 
Ensure you meet all the company's requirements for suppliers, including quality standards, regulatory compliance, and financial stability.
Clear Communication: 
Be clear and transparent in all your communications with the company, especially when it comes to pricing, delivery timelines, and terms and conditions.
Prompt Delivery: 
Deliver your product or service on time as per the purchase order. Delays can damage your relationship with the company and affect future business opportunities.
Accurate Invoicing: 
Make sure your invoices are accurate and include all the necessary details. Errors in invoicing can lead to delays in payment.
Follow Up on Payments: 
Keep track of your invoices and follow up with the company if payment is delayed. However, always maintain a professional and courteous approach.

Understanding the procurement process can help SMEs effectively sell their products or services to companies. By effectively pitching your offerings, getting on the supplier approved list, and navigating the purchase order, invoice, and payment process, you can establish successful business relationships with companies and grow your business.