Small business guide to working with large organisations
Updated: Feb 3, 2018
We have all heard about the collapse of the Carillion PLC and the effect it caused many people both directly (employees) and indirectly (Sub-contractors). I have decided to write a blog on how to work successfully with large companies and multi nationals. This blog is to help navigate the often-complex inner working of very large organisations
I have broken this into 5 key stages, which hopefully can help you work your way around these large organisations
Most large companies have a procurement department and this is how you start the process of working for them. You will need to get your company paperwork in order, nobody wants to work with a company they don’t know or they don’t think can do the work properly. Get in touch and ask to speak to the procurement dept. and ask what their internal process is to get on their supplier list. This is where you have to be careful because often people sound too eager and they know you are desperate for work, they will just fob you off, remember they receive tons of calls like this regularly. Be calm and just ask for the process and take note of the person you have spoken to (this will be useful later).
Getting a contract
Assuming you are now on the list, this doesn’t guarantee a contract; it just means you have gone through the process of getting on the list. The work starts here to get a contract. You can call and ask for the person whose details you initially took when you first made your enquiries. Have your notebook ready, they may give you information that may prove to be very useful, about the chances of getting contracts, how the contract evaluation is done, what level (price) contract you should you go for or if they have any special schemes for SME’s - some large organisations have schemes to help small or local businesses.
Every time you call the procurement dept. keep a note of the name, time and date of the person you have spoken to, this will allow you to start to form a relationship with the department. Most large organisations have an online portal that will advertise their contracts; there are also private fee paying portals that will filter all contracts across many organisations. Enquire about the organisation’s portal during your call. Set your alerts to keep you abreast of new contracts.
Establishing a relationship
Aim to build a relationship by always asking to speak to the same contact every time you call, even if they are not directly linked with your work. Over time they will give you the internal scoop of who does what and who you need to deal with.
A key part of a tender and what most large organisations will be looking for are added value, how you propose to give the organisation the best deal, adding social value, environmental consideration, and showing you have the capacity to deliver an excellent service. It is important to really get across anything that makes your business stand-out in these areas.
Be clear on the points criteria used by the organisation, some organisations will issue higher points for price, and less on technical ability etc. The evaluation criteria are normally listed in the tender document. it is important to adjust your tender accordingly.
Raising invoices & getting paid
Once you have been awarded your first contract, you delivered on time and everything has gone according to the plan, the next hurdle is getting paid. Often small companies are so excited about getting a contract from well known household names they don’t pay enough attention to the payment terms. The typical payment terms are between 60-90 days, officially this is because they are big organisations but unofficially they use this to manage their P& L (profit and loss). If they collect their money from their clients and don’t pay you (contractor) for months, they can use the money for many things before they pay you.
Another thing to look out for is the small print, whilst some might say 60 days, they will count the 60 days from the day your invoice is signed off by the authorised people and not the date on your actual invoice. Contact Accounts Payable and ask to know whom normally deals with your invoices internally, if you don’t get any info, go back to your contact in procurement and they might be able to give you the right contact.
So here’s what you need to do. Ideally, issue your invoices on a weekly basis, the contract officer may not like this as it gives them more work to do but smaller invoice amounts require less signatures and it means you can sail through the process a bit quicker. Often in large organisations, big amounts need 3 level signatures, one of which will be a Director who is far removed from the contract and you are just another supplier to him or her.
To help ease your cash flow, you can sign up to invoice discounting or factoring. This is a process whereby you get 80-90% loan against your invoice amount immediately from a bank and the bank charges an amount of interest until the client pays you. Most high street banks have this facility and you don’t have to do this with your normal bank so shop around for the best deal as this is an efficient way to ease your cash flow.
The trick to using this service is not waiting for your invoice to be paid in 60-90 days, you need to get your money paid asap, so you can pay the bank back. The next thing to do is credit control, you have to chase your invoice from 30 days of issue, the reason for this is to constantly remind them they owe you money. If you imagine a large organisation has thousands of suppliers and with invoices worth millions, you are just a name and a number to them. To be fair, a lot of large organisations are aware that their payment processes can cause cash flow strain on suppliers and they come up with creative ways of making it easier for suppliers to get paid but these systems still require individuals to authorise them that’s why you must put a good amount of effort into credit control.
Lastly, maintaining and managing the relationship with the key contact and accounts payable is key to working for large organisations. Keep in touch and stay ahead of what’s happening, always check the financial health of these organisations and never ever allow your invoice to be at the bottom of their priority list.