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Assist Your Contractor Consumer Transition from Fast Bonds to a Bigger Surety Program


This submit is a part of a collection sponsored by Previous Republic Surety.

When you’ve got building purchasers who’re in progress mode and need to tackle greater tasks, right here’s assist you’ll be able to share for growing their surety capability — notably if they should transition from a credit-based fast bond program to a typical surety program.

Does your organization have progress targets? Does your organization want extra surety capability to achieve these targets? Possibly you’d wish to bid on bigger tasks, or possibly a longtime buyer desires to rent you for a a lot bigger undertaking.

Whereas a typical surety program will not be “one dimension suits all” for each contractor, there are essential steps you’ll be able to take that will help you graduate from a credit-based fast bond program to a typical, bigger surety program:

  • Kind a partnership with trusted monetary advisors.This features a construction-oriented CPA, a financial institution that understands building lending, an expert surety agent and, in fact, your surety underwriter.
  • Improve the standard of your monetary statements.Usually, taking your online business to the following degree requires hiring a construction-oriented CPA to arrange a year-end assessment and high-quality monetary assertion. A building CPA will help with stronger inside controls in addition to crafting the mandatory monetary presentation required for maximizing bonding capability.
  • Strengthen inside controls and your capacity to trace cost-to-complete backlog.Commonplace bond applications require extra refined value techniques and monetary info. Whereas a building CPA can even help, a professional in-house controller will assist develop and strengthen inside processes and controls. A powerful controller may also assist put together inside monetary statements which can be within the desired format and which can be correct and pattern again to your fiscal-year-end CPA assessment.
  • Improve frequency of economic statements. Outdoors of the fiscal-year-end CPA assessment and annual private monetary assertion, additionally, you will want to offer internally ready monetary assertion updates on a quarterly foundation — together with steadiness sheet, earnings assertion, getting older of receivables and work-in-progress (WIP) statements.
  • Acquire (or enhance) a financial institution line of credit score.Building is an unpredictable enterprise that carries substantial danger of unanticipated fee delays. General money circulate administration paired with entry to capital is vital for day by day operations and survival of contractors. Some great benefits of a financial institution line embody offering capital when a receivable is delayed and supplying you with the power to reap the benefits of reductions from materials suppliers.
  • Retain income within the firm.Sureties wish to see an organization organically rising its steadiness sheet. They analyze tendencies and search for regular earnings being retained over a number of years. It’s essential to steadiness your tax planning with leaving capital within the enterprise, which is able to enhance your working capital and net-worth positions — finally strengthening your steadiness sheet. As your organization’s retained earnings and web value enhance, you’ll be able to anticipate your bonding capability to develop together with it. Whereas retained earnings are essential, it’s usually mentioned that “money is king” — as sureties are additionally searching for liquidity and unleveraged capital once they do monetary analyses.

Maintaining surety {qualifications} high of thoughts as a part of your scaling technique will assist set the stage for ongoing eligibility for bigger bonds.

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