Economic and financial standing: what your accounts say before you speak
Nextica Law & Tax reads the company's accounts through the contracting authority's eyes: evidencing economic and financial standing by the means set out in art. 87 of Law 9/2017 —annual turnover for the best year in the required period, the asset-to-liability ratio where the tender asks for it, and professional indemnity insurance—, relying on third-party capacity under art. 75 where your own is not enough, and preparing the financial argument before the filed accounts speak for themselves.
The tender looks at the filed accounts, not at the explanation. Better to know what they say before someone else reads them.
What's included
1. Reading the tender to identify which means of financial standing it has chosen and with what threshold, because everything else depends on that.
2. Calculating annual turnover for the best year within the required period, and checking that the filed accounts support it.
3. Analysing the asset-to-liability ratio where the tender asks for it, with the parameters the tender itself must spell out.
4. Reviewing the professional indemnity policy and confirming its cover reaches the required level and is in force on the right date.
5. Preparing the documentary evidence and its consistency with what is recorded in the bidder registers.
6. Where your own standing falls short
relying on third-party capacity, with the written commitment and an analysis of the liability assumed by whoever provides it.
7. A one-year plan so that next year's accounts support the thresholds of the contracts you want to bid for.
YOUR FILED ACCOUNTS SPEAK BEFORE YOU DO
Financial standing is not explained in the bid: it is evidenced with documents already filed that nobody is going to qualify.
The tender chooses the means of evidence —turnover, asset-to-liability ratio, professional indemnity insurance— and sets the threshold. Meeting it by a different means than the one chosen does not count, however solvent the company is.
art. 87 Law 9/2017Relying on third-party capacity is not a courtesy signature
where what is provided is financial standing, the entity providing it may become jointly and severally liable for performance.
art. 75 Law 9/2017Accounts not filed or filed late
if the chosen means is turnover, the evidence rests on the accounts at the commercial register. A pending filing leaves unevidenced a standing the company actually has.
art. 87 Law 9/2017Frequently asked questions
What evidences economic and financial standing?
Art. 87 of Law 9/2017 sets out a menu and the tender picks from it: annual turnover, taken from the best year within the required period and with a threshold that cannot exceed a set proportion of the contract's estimated value; where applicable, an asset-to-liability ratio with parameters the tender itself must spell out; and professional indemnity insurance with the stated cover. The first thing when reading a tender is not whether you meet it, but which of the three it chose and with what threshold, because that determines how you evidence it.
What if my company is too new or too small?
Art. 75 of Law 9/2017 allows reliance on third-party capacity: relying on the capacity of other entities —within the group or not— provided you evidence that those resources will actually be available throughout performance, by written commitment. It is not a courtesy signature: where what is provided is economic standing, the entity providing it may become jointly and severally liable. And there are specific rules for newly created companies where turnover does not yet exist.
Content reviewed by
Elena Bosch Prat
Directora · Consultoría Contable y Financiera
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