What is Turnover criteria?

What are turnover criteria?

Turnover criteria are part of a tender’s pre-qualification or eligibility conditions. They ask the bidder to prove a minimum annual turnover, most often as an average over the last few financial years, so the buyer knows the firm can handle a contract of that size.

The tender sets the amount, the number of years and how turnover is calculated. The required turnover is often linked to the estimated value of the tender.

How turnover is usually proved

Buyers differ on what they accept, so check the format and the years the tender names.

• Audited balance sheets and profit and loss statements
• A certificate from a chartered accountant, often in a prescribed format and sometimes with a UDIN
• Income tax returns, in some tenders
• Turnover from the relevant line of business only, where the tender says so

Tips for bidders

Read the definition closely: “average annual turnover” and “annual turnover in each year” are different tests. Check whether the years are financial years and which ones count if your latest accounts are not yet audited.

Check whether relaxations apply to you. Some buyers relax turnover or experience conditions for MSEs or startups, but this varies and is not automatic.