Corporate Scorecard is a subsidiary of Equifax that assists with the assessment of the financial capacity of organisations including for pre-qualification, pre-contract award and post contract award monitoring for contracts. This assessment has been around for several years and many of our clients, who are contracted to work for government organisations, are being presented with this as a mandatory procedure to complete (and pass) prior to contract approval.
A Corporate Scorecard assessment is mandatory to all Public Authorities in the Perth Region and customers in Regional Areas and other approved users may be subject to this assessment at the Government’s discretion. These scorecards are also provided for construction companies contracting at a level of $50,000,000 per annum and for all roads and bridges contractors.
How does the Corporate Scorecard work?
It contains a series of questions in relation to your business’s financial position and credit history, ultimately scoring your capacity to complete the work or supply goods and services without becoming insolvent or experiencing financial distress.
You will be required to complete these questions as part of the bidding process, which is where Ledge is more than happy to assist. The questions may seem straightforward, however a lot of the time businesses are not completely across their credit history and other financial information that is required. This may result in businesses failing the credit assessment or not completing the scorecard to the best of their ability.
The following table provides an example of information that may be required for a Corporate Scorecard assessment.
Request of information schedule example:
- Financial Statements (P&L, Balance Sheet and Notes) for the years ended 30 June 2018, 2017 and 2016. Management accounts for FY18 are to be supplied if figures not yet finalised. The accounts are to be signed by a Director to confirm accuracy. Note: To include tendering entity and any other related trading entity.
- The FY18 accounts provided do not include an income tax expense, is it appropriate to use 30%? If no, please provide an alternate rate.
- The FY18 accounts provided do not include a dividend payment and Directors anticipate that a dividend will be declared when the accounts are finalised, please provide an estimate (either $ amount or % of after tax profit).
- Brief commentary on the year-to-date trading performance and trading performance of the most recently completed financial year, including major factors contributing to the profit/(loss), one-off/non-recurring items and reasons for any significant variances to budget.
- A copy of the latest year-to-date management accounts (including P&L, Balance Sheet, Cash Flow and Notes), signed by a Director to confirm accuracy.
- Forecast sales revenue and pre-tax profit for the financial year ending 30 June 2019.
- The dividend policy and proposed payout (either $ amount or % of after tax profit) for the financial year ending 30 June 2019.
- Are all trade debtors fully recoverable? Please provide an aged trial balance for debtors and details of debts written off during the year and details of additional provisioning, if any.
- Are all trade creditors paid within terms? Please provide an aged trial balance for creditors.
- Latest accounts provided (1) as at Balance sheet date, (2) as at today, if there are loans to related parties, please provide: Name of the related party(s), Amount outstanding, Is the loan interest-bearing, Are the above loans fully recoverable as and when due?
- For each type of funding facility in place (e.g. overdraft, bank guarantees, loans and surety bonds) please provide the following: Name of provider, Type of facility (e.g. overdraft, bank guarantees, etc), Limit of facility, Amount utilised, Maturity date, Covenants (financial, operating, reporting, etc), Where available, please provide this information in the form of a letter from entity’s financier.
- Has the entity been in breach of any of its banking covenants now or in the past 3 years? If yes, please provide details including date, reason for the breach and remedial action taken.
Corporate Scorecard financial viability assessments are used to assess risk by considering the consequences of failure or poor service delivery due to capacity or cash flow constraints in terms of replacements costs, legal fees and project delays. To find out more on how Ledge can work with your internal or external advisors to assist your business when presented with this assessment, contact your Ledge Finance Executive direct, or contact us here.
More information can also be found at corporatescorecard.com.au
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