What you should know about the Financial Qualifications for getting a GSA Schedule
I am a strong believer in the GSA Schedule system for making inroads into federal contracting. A GSA Multiple Award Schedule can open up a large federal sales channel for your business. The proof is that the average small business with a GSA Schedule does over $1MM per year in federal sales as a direct result of the firms GSA contract with the assistance of GSA Schedule consultant.
The challenge for smaller firms can be showing the financial capacity required by the General Services Administration to get on GSA Schedule.
Financial Criteria for obtaining a GSA Schedule:
Recommended Sales Level by GSA Schedule Consultant
$25,000 in sales per year of the product or service you want to sell on schedule. If you don’t meet this sales figure, you may still have the potential to get a GSA Schedule but a much closer look at your business will occur.
Recommended Number of Customers
Having at least 3 to 5 customer references that GSA can contact or 3 CPARS (Contract Performance Assessment Reporting System) from past federal contracts.
Recommended Years of Experience
generally the company needs to have been in business for two years or more.
Causes of Higher Scrutiny by GSA
- Higher scrutiny is placed on firms that are not currently profitable
- Higher scrutiny is placed on firms that do not have positive working capital, (current assets less current liabilities)
- Higher scrutiny is placed on firms that do not have a positive net worth (total assets less total liabilities).
- Higher scrutiny is placed on firms that lack access to capital, typically seen in the form of a bank line of credit or other credit faculty.
Invoicing and installment terms might contrast from standard business contracts. It's normal for government agreements to be month to month, net-60, which implies you may not get installment for 90 days. Any missteps can prompt a deferral in installment for a while.
There may likewise be exceptional invoicing prerequisites with the help of GSA Schedule consultant. Government contracting expects you to monitor your subsidizing and tell the public authority when you've reached 75% of your financing. Inability to do as such may convey a punishment. Peruse contracts cautiously to guarantee that you comprehend your obligations as a project worker.
GSA Schedule consultants are there to assist you with exploring the tangled universe of government contracting. A GSA schedule consultant is not just comprehending the subtleties of the GSA Schedule program, yet government contracting overall. They are educated with regards to explicit prerequisites, best practices for getting and keeping a timetable agreement, staying consistent all through its term, and using the agreement to its fullest.
If the GSA finds that the firm’s historical financial statements do not prove financial stability then the firm is permitted to build a case showing that the firm has the ability to complete federal contracts. The procedure for accomplishing this is the completion of a “certificate of competency” COC from the SBA. It has been my experience that usually the SBA does not have issues with granting a COC under the following set of circumstances.
- Your bank provides a good financial reference for your firm.
- The reason the firm was not profitable in the previous year is due to large expenditures on R&D. Going forward the firm is expected to be profitable.
- The firm had a one-time bad debt expense, or similar negative transaction which caused the firm to have a negative net worth.
- The firm is able to obtain a letter of credit from a financial institution or a credit line increase for $50,000-100,000.
- The firm is able to show how it was able to perform on a recent contracts that are similar in nature.
- The firm is able to show that it will have positive cash flow based upon completing a federal contract with a 60 day delay in payments from the federal government. (In these cash flow projections the firm must never go negative.)
Even firms with a few financial issues in the past can get a GSA Schedule provided with the help of GSA Schedule consultant that the explanation for the issue is believed to be plausible by the SBA and is non-reoccurring.