B2G: A new growth market for small and medium enterprises – The Manila Times

FOR small and medium enterprises (SMEs), it's always a challenge to find new customers and business opportunities. Nearly all businesses in the Philippines — 99 percent — are SMEs. The remainder are large companies with high brand recognition among the public and bigger pools of funds, investors, advisers and marketing teams to keep their businesses growing.
However, wider access to the internet and information technology have helped SMEs find new ways to sell products and services on shoestring budgets. Beyond using social media channels, SMEs are now increasingly adopting e-commerce and direct-to-consumer (D2C) online shops.
Since the Covid-19 pandemic began, at least 48 percent of Filipinos want to continue buying goods using online means, according to marketing research firm Global Web. Global Data reports that income from online sales in the country grew by 12 percent last year and e-commerce professionals expect further growth as digital technology becomes more accessible to Filipinos.
However, e-commerce and D2C are not without their downsides. First, because online shopping tools are free to use, competition is stiff among SMEs. Consumers play up this competition to their advantage: Filipinos visit up to eight websites before purchasing a product, according to a report from Facebook Inc. and consulting firm Bain & Co.
Second, with numerous sellers available online, getting into price wars is inevitable. Consumers who shift to online stores are looking for the lowest price. While you can sway a big share of the market toward your brand in the short term by pricing low, this strategy can lead to difficulties in cash flow and revenue loss in the long term.
Third, digital fraud against businesses is also on the rise and cybersecurity analysts say the threat remains. Digital fraud rose by 31 percent during the lockdowns in 2021, according to credit risk manager TransUnion. Payments from e-commerce may be unsecured if the SME owner and consumer choose to use unknown payment providers. Plenty of bad actors deliberately use stolen credit card data or doctored proof of payments in dealing with business owners, causing thousands in lost inventory.
With D2C and e-commerce's accessible but still competitive business landscape, there must be another way for SMEs to generate more sales.
Fortunately, the Department of Trade and Technology has also tapped digital tools to link SMEs to government agencies and local government units (LGUs) procuring products and services. Through the PhilGEPS (Philippine Government Electronic Procurement System), an online portal with hundreds of contracts posted daily, SMEs can explore business-to-government (B2G) transactions.
B2G, or supplying to the government, has many advantages that B2C (business-to-consumer) and B2B (business-to-business) operations cannot offer. First, government clients are stable — they need products and services year-round, in both good times and bad. They also buy goods and services in large quantities, helping supplier SMEs grow rapidly.
To access bid notices and submit bids to various government procurers, business owners must sign up as a supplier on the PhilGEPS website. Past that point, however, SMEs find that B2G transactions are not so simple. SMEs still miss relevant opportunities because many simply don't have the time to explore PhilGEPS contracts regularly. Many SMEs also lack the proof of funding needed to win the bidding for contracts. This is because SMEs often count on unpaid receivables from ongoing projects to fund their next business opportunities.
To make PhilGEPS contracts more accessible, First Circle created Project Finder (https://my.firstcircle.ph/project-finder). It helps SMEs break into B2G operations through a free and searchable database of government contracts. These contracts are scraped from PhilGEPS and LGU websites, showing project details that are otherwise inaccessible without a PhilGEPS account or an exhaustive online search.
Project Finder users can find projects with a simple keyword search and filter results further by contract budget and region. Users can also save time by setting daily or weekly email alerts for business-relevant government projects. To do this, search for a keyword then click the “Get alerts for this search” button above the search results.
More importantly, Project Finder users can get project funding directly on the platform by clicking “Apply for credit line.” This leads to an application form for PhilGEPS Project Finance, First Circle's exclusive loan product for government suppliers. SME applicants who qualify for the product will receive a revolving credit line, which they can opt not to use unless needed. The credit line is free and always available. If used, SMEs only pay for the amount they borrowed plus interest.
Qualified SMEs will also receive proof of funding to include in their bidding documents — increasing their chances of winning the government project. Lastly, SMEs who borrow from their credit line can pay upon completion of their government project — mitigating cash flow gaps and accounting for possible payout delays.
For business owners without a PhilGEPS account, Project Finder can help gauge if there are enough projects in their industry to justify the cost of a PhilGEPS Platinum membership. For Platinum members, Project Finder saves them time by finding them projects that suit their business capabilities and providing funding to take on larger opportunities.
The market for B2G operations is still growing, with plenty of advantages for SMEs that win contracts: credibility, government recognition of their business quality and connections that generate more opportunities. By using both PhilGEPS and Project Finder to augment their chances of winning a bid, SMEs can successfully break into this new growth market and have a more stable roster of clients for years to come.
Kathryn Jose is a multimedia writer who contributes stories on banking, finance, technology and entrepreneurship. She studied at the University of the Philippines Diliman.


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