The main purpose of the Preferential Procurement element on the QSE scorecard and the Generic Scorecard, is to allow enterprises to gain points when they buy from other businesses that have a higher BEE and BBBEE score.
Preferential Procurement is a incentive for companies to achieve BEE and BBBEE compliancy as this will open new doors of business for them.
The Preferential Procurement score is a complex calculation and is based on each supplier's BBBEE rating.
The rating of the supplier will influence the amount of points you may add to your scorecard.
In essence it means that the higher the supplier's BBBEE score, the more points can be added to your scorecard by using the prescribed calculation table.
Expenses that can be claimed as Preferential Procurement Spend: •Financial services such as banking facilities and insurance •Offices and commercial space rent •Legal fees •Travel expenses relating to business •Services and raw material •Multinational corporations who operate in South Africa •Natural monopoly spending such as Telkom Expenses that can not be claimed as Preferential Procurement Spend: •Salaries and wages •Using overseas companies for certain tasks because they are cheaper, while it could be done locally •Charges from other departments or suppliers from within the same group •Donations and Social Investment •Taxes A Qualifying Small Enterprise can gain competitive advantage over its competitions by becoming BEE or BBBEE compliant.
This competitive advantage is derived from the fact that larger businesses and companies have to spend 10% of their recognised procurement spend on Qualifying Small Enterprises (QSE) Preferential Procurement will have a substantial positive influence and effect on any business and therefore it is important that all business achieve BBBEE compliancy status as soon as possible.