Improve Your Contractor Purchasers’ FastBond to a Commonplace Bond Program

This put up is a part of a collection sponsored by Outdated Republic Surety.

Your contractor shoppers right now have extra alternatives to work on higher-value initiatives in each the private and non-private sectors. In response to an business outlook report by the Related Basic Contractors of America, in 2024, contractors anticipate demand for development initiatives in 14 out of the 17 development classes surveyed to extend in 2024. Among the sectors with the most important anticipated development embody sewer and water, freeway and bridge, federal initiatives, energy initiatives and healthcare services.

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

Many smaller or newer-in-business contractors get hold of bonds on smaller sized initiatives by abbreviated underwriting applications similar to Outdated Republic Surety Firm’s FastBond program to get the wanted bonds for these contracts.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 shoppers ought to take into account shifting from a FastBond-type program to a typical contract bond program and the way they will accomplish that.

• The contractor desires to develop and improve earnings Changing to a typical bond program opens up alternatives for bigger and extra various contracts. Competitors is proscribed on many bigger contracts, serving to to lift the opportunity 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 increased charges. Outdated Republic Surety writes FastBonds that may go as excessive as $2 million mixture, usually at a $20 to $30/thousand fee. 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 typical program

Commonplace bond applications require extra subtle monetary info and value programs. Contractors can improve 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 knowledgeable surety agent, a construction-oriented CPA, a financial institution that understands development 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 programs and may present the percentage-of-completion format most popular by sureties. CPAs will help you in presenting your monetary profile in the very best gentle. Extra 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 price. Make the dedication to construct up your steadiness sheet to help your required program by forgoing massive bonuses or pointless gear purchases. As soon as the steadiness sheet helps your program, surplus capital will 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 inside controls. Sturdy programs that observe 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 essential to the success of your organization. The next greatest practices will contribute to improved bottom-line profitability:

• Unannounced job web site inspections
• Using accredited contract types
• Correct documentation of change orders
• Proof of insurance coverage for all subcontractors
• Safety of property similar to gear and supplies
• Written security insurance policies to attenuate 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 possibly can present the surety relating to the job you need 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 likelihood of acquiring elevated surety help.

Outdated Republic Surety Firm prides itself on taking a consultative strategy with contractors which might be keen to comply with the wanted steps to extend their bonding capability. We are able to offer you the recommendation you have to take your bonding program to the subsequent stage. Contact your bond agent for extra info, or contact us so we are able to join you with the perfect bond producers within the enterprise.

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