none

Finance the biggest barrier to winning tenders

08-07-2013
by 
in 
Finance the biggest barrier to winning tenders
The inability to secure finance is a significant barrier to SMEs winning tenders in the resources industry, a new report commissioned by Australia’s export credit agency (EFIC), has found.
 
The survey of 2000 Australian SMEs showed that while resources sector growth has created opportunities for SMEs across the country, obtaining finance, fulfilling lenders’ security requirements and a drawn-out credit process are major impediments to SMEs successfully bidding on resource contracts.
 
The research also showed that of those SMEs that had secured a tender, 85 per cent required extra finance to win or execute the contract.
 
Robert Dravers, EFIC Director, SME and Mid-Market, said it was concerning that such a large proportion of SMEs faced financial barriers in securing business opportunities in the resources industry and that they seemed unaware of the finance options available. 
 
“Greater awareness of other financing options, including the support that EFIC can offer onshore contractors assisting in the delivery of an export, is needed in order to ensure that SMEs can take advantage of Australia’s strong resource sector, join the supply chain and potentially take on larger contracts than they would otherwise be able to,” he said.
 
The survey also showed that networks are vital to securing contracts, with 66 percent of SMEs finding out about tenders through word-of-mouth.
 
Mr Dravers said that while winning tenders can be tough, planning, preparation and access to suitable finance in a timely fashion are the keys to success. 
 
Despite the difficulties associated with obtaining finance, the opportunity to join Australia’s resources industry is attracting interest from SMEs nationwide.
 
“Surprisingly, the research showed that more than two-thirds of SMEs looking for resource sector contracts are based in either NSW or Victoria, even though most projects are in Western Australia or Queensland” Mr Dravers said.
 
Other key findings included: 
 
The most common areas for SME tendering are services, with only six percent involved in exploration 
 
The average value of contracts tendered for is just under A$1 million 
 
Close to a third of SMEs who have not yet been successful in securing a tender said a lack of readiness was a contributing factor to their failure
 
Four out of five of SMEs that have won contracts in the supply chain said they subsequently faced financial constraints, which prevented them from looking for other opportunities or additional contracts.
 
A full copy of the research report can be downloaded at: www.efic.gov.au\manufacturingnews.
 
* Export Finance and Insurance Corporation (EFIC) provides finance and insurance solutions to help Australian exporters overcome the financial barriers they face when growing their business overseas.
 
As the Australian Government’s export credit agency, EFIC helps successful businesses to win, finance and protect export trade or overseas investments when banks are unable to provide full financial support.
EFIC works directly with exporters or with their banks to provide loans, guarantees, bonds and insurance products which can be tailored to meet the needs of both large and small exporters.
 
Export Finance and Insurance
Corporation (EFIC)
Ph: 1800 887 588

Related news & editorials

  1. 20.06.2019
    20.06.2019
    by      In
    The adage that success breeds success could well have been written for Sydney-based fabricator and manufacturer F&D Normoyle Engineering.
    The company has become recognised as one of Australia’s leading lights in producing structural steel, timber and glass and all types of architectural... Read More
  2. 20.06.2019
    20.06.2019
    by      In
    From its Melbourne headquarters, Duratray - a leading supplier of trays for mining trucks – is leading the way with innovative technology that has driven its global expansion.
    Duratray was established in the 1970s. Since its purchase by current owners Conymet in 2001, it has grown its international... Read More
  3. 20.06.2019
    20.06.2019
    by      In
    REDARC Electronics has come a long way since it started designing and manufacturing vehicle ignition systems out of a modest shed at Lonsdale in Adelaide’s southern suburbs in 1979.
    Now celebrating 40 years in manufacturing the company has grown from its humble beginnings to become a world-class... Read More
  4. 14.06.2019
    14.06.2019
    by      In
    The University of Western Australia and its partner organisations will receive $67.5 million in overall funding for world-class equipment to advance scientific research in Western Australia and support WA jobs in STEM industries.
    The State Government has committed $10.5 million over the next three... Read More