Improve Your Contractor Shoppers’ FastBond to a Commonplace Bond Program

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

Your contractor shoppers at this time have extra alternatives to work on higher-value tasks in each the private and non-private sectors. In accordance with an business outlook report by the Related Normal Contractors of America, in 2024, contractors anticipate demand for building tasks in 14 out of the 17 building classes surveyed to extend in 2024. A number of the sectors with the most important anticipated development embrace sewer and water, freeway and bridge, federal tasks, energy tasks and healthcare amenities.

This is a perfect time for you and your contractor shoppers 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 tasks via abbreviated underwriting packages akin 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 have a look at why your contractor shoppers ought to think about transferring from a FastBond-type program to a normal contract bond program and the way they will accomplish that.

• The contractor desires to develop and improve earnings Changing to a normal bond program opens up alternatives for bigger and extra various contracts. Competitors is restricted on many bigger contracts, serving to to boost the potential of elevated earnings.
• The price of the bond itself. FastBond packages are designed for a contractor that has occasional bond wants, and FastBonds are usually charged increased charges. Previous Republic Surety writes FastBonds that may go as excessive as $2 million combination, usually at a $20 to $30/thousand charge. 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 normal program

Commonplace bond packages require extra refined monetary info and value techniques. Contractors can improve their bonding capability with a normal bond program by following these 5 steps:

1. Kind a partnership along with your key monetary advisors. These embrace an expert surety agent, a construction-oriented CPA, a financial institution that understands building lending and, after all, your surety underwriter.
2. Improve 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 robust inside price techniques and might present the percentage-of-completion format most well-liked by sureties. CPAs will help you in presenting your monetary profile in the very best mild. Further earnings earned and cash saved by changing to a normal surety program ought to greater than pay for the extra prices {of professional} CPA companies.
3. Develop working capital and company web value. Make the dedication to construct up your stability sheet to assist your required program by forgoing massive bonuses or pointless gear purchases. As soon as the stability sheet helps your program, surplus capital will be withdrawn as desired. This reveals that you’re prepared to do what it takes now to make your organization profitable in the long run.
4. Present proof of inside controls. Sturdy techniques that monitor job prices, handle the gathering of receivables, present for the immediate fee of payments when due, decrease surplus stock, and improve worker efficiency are all vital to the success of your organization. The next finest practices will contribute to improved bottom-line profitability:

• Unannounced job website inspections
• The usage of accepted contract varieties
• Correct documentation of change orders
• Proof of insurance coverage for all subcontractors
• Safety of belongings akin to gear 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 possibly can 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 might be in offering the bond. Moreover, your willingness to satisfy underwriting necessities will vastly enhance your probability of acquiring elevated surety assist.

Previous Republic Surety Firm prides itself on taking a consultative method with contractors which might be prepared to observe the wanted steps to extend their bonding capability. We will offer you the recommendation you might want to take your bonding program to the following degree. Contact your bond agent for extra info, or contact us so we are able to join you with one of the best bond producers within the enterprise.

Matters
Contractors