When a surety company is considering a contractor for bonding, they are strict with the owner’s credit but they are even more critical when reviewing the business financials. The quality and presentation of the financials play a big role in regards to a contractor getting strong surety support.
Business financials are necessary whether a contractor is doing a smaller public job for a county swimming pool or a sizable one like building a bridge connecting a pair of cities. Although should they be on the medium/ larger side (over $250K) it’s vital that in depth and professional financials are submitted to the surety company, preferably prepared by a CPA. Surety underwriters see a wide range of financials in both style and quality. Poor financials can reduce your potential bonding capacity and will also negatively affect your financial presentation overall; choosing the right CPA can make a big difference in how the surety company views your company.
It’s in your favor to find a CPA that often works with contractors and who provides their services in relation to construction projects because they know what the surety is looking for. A CPA that’s familiar with contract bonding can help provide contractors explanations of what sureties look for, why they look for it and how they react to certain circumstances; the CPA can aid in guiding a contractor down the right path so they can obtain a larger bonding capacity or bonds period. Extensive business financials from a CPA who’s familiar with contract bonding will take out guesswork that sureties often have to do when it comes to evaluating a companies’ financial condition; when a surety company has to use guesswork, you’re off to a bad start. Guesswork and undetailed financials creates insecurity for the surety concerning the financial strength of your company. In a time of dwindling balance sheets and increased competition for projects, an experienced CPA plays a critical role for a contractor trying to obtain a surety bond.
With the competition for employment being so high, it’s important to give yourself any edge possible to standout. When you bring professional business financials to the construction project table, it helps paint a clear picture of your company’s wellbeing as well as helps ease the minds of surety underwriters considering your company for potential bonds.