Improve Your Contractor Shoppers’ FastBond to a Commonplace Bond Program

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

Your contractor purchasers in the present day have extra alternatives to work on higher-value tasks in each the private and non-private sectors. In accordance with an trade outlook report by the Related Common Contractors of America, in 2024, contractors count on demand for development tasks in 14 out of the 17 development classes surveyed to extend in 2024. Among the sectors with the biggest anticipated development embody sewer and water, freeway and bridge, federal tasks, energy tasks and healthcare amenities.

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

Many smaller or newer-in-business contractors receive bonds on smaller sized tasks by means of abbreviated underwriting applications 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 purchasers ought to think about shifting from a FastBond-type program to a normal contract bond program and the way they’ll accomplish that.

• The contractor desires to develop and improve income 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 lift the opportunity of elevated income.
• 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, usually at a $20 to $30/thousand price. Commonplace program charges are decrease, enabling the contractor to tender extra aggressive bids and presumably earn higher margins on their work.

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

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

1. Type a partnership along with your key monetary advisors. These embody an expert surety agent, a construction-oriented CPA, a financial institution that understands development lending and, in fact, your surety underwriter.
2. Enhance the standard of your monetary assertion presentation. CPA-prepared financials add credibility to the data you present. A CPA, ideally a construction-oriented CPA, understands the significance of sturdy inner value 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 absolute best mild. Extra income 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 help your required program by forgoing massive bonuses or pointless tools purchases. As soon as the stability sheet helps your program, surplus capital could 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 inner controls. Strong techniques 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 necessary to the success of your organization. The next finest practices will contribute to improved bottom-line profitability:

• Unannounced job web site inspections
• The usage of permitted contract varieties
• Correct documentation of change orders
• Proof of insurance coverage for all subcontractors
• Safety of property akin to tools and supplies
• Written security insurance policies to reduce job web site hazards
• Incentives that reward workers 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 might be in offering the bond. Moreover, your willingness to satisfy underwriting necessities will tremendously enhance your likelihood of acquiring elevated surety help.

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

Matters
Contractors