Improve Your Contractor Purchasers’ FastBond to a Commonplace Bond Program

This submit is a part of a collection sponsored by Outdated Republic Surety.

Your contractor shoppers at this time 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 Common Contractors of America, in 2024, contractors anticipate demand for development initiatives in 14 out of the 17 development classes surveyed to extend in 2024. A few of the sectors with the most important anticipated progress embrace sewer and water, freeway and bridge, federal initiatives, energy initiatives 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contractors get hold of bonds on smaller sized initiatives via abbreviated underwriting applications comparable to Outdated Republic Surety Firm’s FastBond program to get the wanted bonds for these contracts.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 economic and different underwriting data 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 shifting from a FastBond-type program to an ordinary contract bond program and the way they’ll accomplish that.

• The contractor desires to develop and improve earnings Changing to an ordinary bond program opens up alternatives for bigger and extra numerous contracts. Competitors is restricted 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 Outdated Republic Surety writes FastBonds that may go as excessive as $2 million combination, typically at a $20 to $30/thousand fee.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 an ordinary program

Commonplace bond applications require extra subtle monetary data and value methods. Contractors can improve their bonding capability with an ordinary bond program by following these 5 steps:

1. Kind a partnership together with your key monetary advisors. These embrace 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 inner price methods 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 gentle. Further earnings earned and cash saved by changing to an ordinary surety program ought to greater than pay for the extra prices {of professional} CPA companies.
3. Develop working capital and company web price. Make the dedication to construct up your steadiness sheet to assist your required program by forgoing giant bonuses or pointless gear purchases. As soon as the steadiness sheet helps your program, surplus capital could be withdrawn as desired. This exhibits 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. Sturdy methods 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 greatest practices will contribute to improved bottom-line profitability:

• Unannounced job web site inspections
• Using authorised contract kinds
• Correct documentation of change orders
• Proof of insurance coverage for all subcontractors
• Safety of property comparable to gear and supplies
• Written security insurance policies to reduce job web site hazards
• Incentives that reward staff for bottom-line revenue

5. Present details about the job to be carried out. The extra detailed data you may present the surety concerning 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 can be in offering the bond. Moreover, your willingness to satisfy underwriting necessities will tremendously enhance your probability of acquiring elevated surety assist.

Outdated Republic Surety Firm prides itself on taking a consultative strategy with contractors which are prepared to comply with the wanted steps to extend their bonding capability. We will give you the recommendation you could take your bonding program to the following stage. Contact your bond agent for extra data, or contact us so we are able to join you with the perfect bond producers within the enterprise.

Subjects
Contractors