Financial Viability Risk Assessment (FVRA) How-To Guide for G-Cloud 14 Suppliers
Introduction
The transition to G-Cloud 14 introduces mandatory financial checks for suppliers. CCS requires Lots 1-3 contract bidders to conduct an assessment of your Economic and Financial Standing (EFS) and will require you to complete Financial Viability Risk Assessments (FVRAs) should you fail the EFS. All Lot 4 suppliers are required to conduct an FVRA as part of their response.
RiskTrace automates EFS and FVRAs - find out more at www.risktrace.com/suppliers
Understanding and preparing for these assessments is crucial for your continued collaboration with CCS and any of your public sector clients procuring your services through the agreement. This guide offers a straightforward approach to navigating FVRAs under G-Cloud 14.
Understanding FVRAs
An FVRA is a thorough examination of your financial health. It is the way that CCS, and the Government in general, assure themselves that you are stable and reliable enough to deliver services to the government. G-Cloud 14 mandates these assessments to mitigate financial risks and foster a more stable cloud services marketplace.
Step 1: Gather Your Financial Documents
Start by compiling recent financial statements, including balance sheets, income statements, and cash flow statements. You'll also need your latest tax returns and any documentation related to debt, liabilities, and assets. These documents provide the foundation for your FVRA.
Step 2: Analyse Your Financial Health
Before diving into the EFS & FVRA process, conduct an internal review of your financial health. Look for areas of strength and concern in your business finances, such as high levels of debt or strong revenue growth. Understanding your financial situation will help you address potential issues proactively.
Step 3: Understand the EFS Criteria
G-Cloud 14's Lots 1 to 3 EFS criteria focus on four key financial metrics:
D&B Failure Score
Must be greater than 50
Operating Profit Margin
Has to be greater than 2%
Net Worth
Has to be greater than £0
Quick Ratio Calculation
Has to be greater than 0.7
Familiarise yourself with these metrics and how they apply to your business. Tools like RiskTrace can automate and simplify this analysis, offering insights into how you measure up against these criteria.
If you pass the EFS criteria and you are bidding on Lots 1-3, you will not need to complete an FVRA.
Lot 4 doesn’t require these initial metrics but it does require you fill a full FVRA.
Step 4: Complete the FVRA Form
If you don’t meet the EFS criteria for Lots 1 to 3 you will be required to complete an FVRA. If you are bidding for Lot 4 the EFS Criteria don’t apply, you’re required to complete the FVRA no matter what. It requires extensive and detailed financial information and projections covering 11,000 data points and 21 worksheets.
Be prepared to provide explanations and data supporting your financial viability. Accuracy and transparency are key—ensure all information is up-to-date and thoroughly checked.
Step 5: Submit and Monitor
Once you've completed the FVRA form, submit it as part of your G-Cloud 14 application. After submission, stay vigilant and be prepared to provide additional information or clarification if requested by the assessment team.
Step 6: New Assessments
If you’re successful in making it onto G-Cloud 14 then it's likely you will be asked to produce an FVRA in the future.
Cabinet Office guidance requires your public sector clients to run the same assessment when they procure through G-Cloud. The assessment will be specific to your client’s requirements and estimated project value.
They can’t reuse the FVRA that you did for CCS to get on to G-Cloud. So it’s worth keeping yourself up to date.
Mitigating Risk and Ensuring Compliance
A few additional recommendations from our team:
Maintain Financial Health:
Regularly review your financial strategies to ensure ongoing compliance with G-Cloud 14 requirements.
Leverage Automation:
Tools like RiskTrace can streamline the FVRA process, reducing the risk of errors and saving valuable time.
Seek Expert Advice:
Consider consulting with financial and government procurement advisors to strengthen your application and address any potential vulnerabilities.
Conclusion
Navigating the FVRA process under G-Cloud 14 may seem daunting, but with careful preparation and the right tools, you can demonstrate your financial viability and continue to be a trusted supplier to the public sector.
Remember, the goal of these assessments is to ensure a stable and reliable marketplace for cloud services - a benefit to suppliers and clients alike.
RiskTrace provides automated tools and dedicated expertise for suppliers whose Economic and Financial Standing is being assessed by their suppliers and need to conduct an FVRA as a result.
Get in touch at www.risktrace.com/suppliers for more information.