Improve Your Contractor Purchasers’ FastBond to a Commonplace Bond Program

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

Your contractor purchasers as we speak have extra alternatives to work on higher-value initiatives in each the private and non-private sectors. Based on an business outlook report by the Related Common Contractors of America, in 2024, contractors anticipate demand for building initiatives in 14 out of the 17 building classes surveyed to extend in 2024. A number of the sectors with the most important anticipated progress embody sewer and water, freeway and bridge, federal initiatives, energy initiatives and healthcare services.

This is a perfect time for you and your contractor purchasers to debate actions and techniques that may assist them qualify for elevated bonding capability.

Many smaller or newer-in-business contractors acquire bonds on smaller sized initiatives by abbreviated underwriting applications similar to Previous Republic Surety Firm’s FastBond program to get the wanted bonds for these contracts. FastBond streamlines the underwriting course of, is primarily credit-based, and doesn’t require the extent of monetary and different underwriting info wanted to qualify for the standard bond program for bigger contracts.

Causes to improve a contractor’s bonding capability

Let’s take a look at why your contractor purchasers ought to contemplate shifting from a FastBond-type program to a typical contract bond program and the way they will achieve this.

• The contractor needs to develop and enhance earnings Changing to a typical bond program opens up alternatives for bigger and extra various contracts. Competitors is restricted on many bigger contracts, serving to to lift the potential of elevated earnings.
• The price of the bond itself. FastBond applications are designed for a contractor that has occasional bond wants, and FastBonds are sometimes charged larger charges. Previous Republic Surety writes FastBonds that may go as excessive as $2 million combination, typically at a $20 to $30/thousand price. Commonplace program charges are decrease, enabling the contractor to tender extra aggressive bids and probably earn higher margins on their work.

5 steps to transition from a FastBond program to a typical program

Commonplace bond applications require extra refined monetary info and value programs. Contractors can enhance their bonding capability with a typical bond program by following these 5 steps:

1. Kind a partnership together with your key monetary advisors. These embody an expert surety agent, a construction-oriented CPA, a financial institution that understands building lending and, in fact, your surety underwriter.
2. Enhance the standard of your monetary assertion presentation. CPA-prepared financials add credibility to the knowledge you present. A CPA, ideally a construction-oriented CPA, understands the significance of sturdy inner price programs and might present the percentage-of-completion format most popular by sureties. CPAs will help you in presenting your monetary profile in the very best gentle. Further earnings earned and cash saved by changing to a typical surety program ought to greater than pay for the extra prices {of professional} CPA providers.
3. Develop working capital and company web value. Make the dedication to construct up your stability sheet to help your required program by forgoing giant bonuses or pointless tools purchases. As soon as the stability sheet helps your program, surplus capital might be withdrawn as desired. This reveals that you’re keen to do what it takes now to make your organization profitable in the long run.
4. Present proof of inner controls. Strong programs that observe job prices, handle the gathering of receivables, present for the immediate fee of payments when due, reduce surplus stock, and improve worker efficiency are all essential to the success of your organization. The next finest practices will contribute to improved bottom-line profitability:

• Unannounced job website inspections
• Using authorised contract kinds
• Correct documentation of change orders
• Proof of insurance coverage for all subcontractors
• Safety of belongings similar to tools and supplies
• Written security insurance policies to attenuate job website hazards
• Incentives that reward staff for bottom-line revenue

5. Present details about the job to be carried out. The extra detailed info you may present the surety relating to the job you wish to bid and the way your expertise and capabilities qualify you to efficiently carry out it, the extra assured the surety can be in offering the bond. Moreover, your willingness to satisfy underwriting necessities will vastly enhance your likelihood of acquiring elevated surety help.

Previous Republic Surety Firm prides itself on taking a consultative method with contractors which can be keen to observe the wanted steps to extend their bonding capability. We will offer you the recommendation it’s essential take your bonding program to the subsequent stage. Contact your bond agent for extra info, or contact us so we will join you with the very best bond producers within the enterprise.

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