Being a Bondable Contractor Sets You Apart from Your Competition
The concepts for this blog post have been provided by Anne Wright and Cindi Beilman of Surety Associates of Southern California. They share how being a bondable contractor is an advantage to both contractors and companies that subcontract.
As required by public contract code, if you bid public work as a prime contractor you need to be bondable. If you bid as a subcontractor, the general contractor may require you to provide bonds back to them. If you are bidding private work, owners and/or their bank may require the prime contractor or subcontractors to bond.
Becoming a bondable contractor enables you to demonstrate to your prospective customers that you are credit worthy. A bonding agent acts as a representative of your company to the surety that ultimately provides your surety line of credit. They evaluate and package your information and present it so that you obtain the best relationship available based on which surety and underwriter will understand and support your company. They look at the history of what you’ve accomplished, and how, and that is what is emphasized on your behalf.
The bonding relationship imposes tools that can be very useful in helping you manage your business. Through this process you may find that the surety relationship provides you with important management tools such as tracking profitability on your jobs and management of your debt.
A bonding agent works alongside your accounting staff and/or your outside accountant to utilize the “work in progress report”. This report will identify which jobs run most profitably, and both the work in progress report and financial statements identify where costs might be better managed to recognize maximum profitability. Identifying financial ratios and trends indicate to you, your surety, and your banker how you run your business and what that means to risk management for all parties. These are very important components that impact the perception of your business.
A competent bonding agent will look for ways to ensure long term, profitable futures for their client and their surety partners. They will become another trusted advisor for you and your business.