Liquidity Ratios for Contractors (Part 2)

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Last week we explored the types of financial ratios available to the Contractor and began investigating liquidity ratios. This week, we will continue our discussion on liquidity ratios. We will be referring back to our XYZ Company example from last week.

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Topics: Surety Bonding

Liquidity Ratios for Contractors (Part 1)

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Financial statements report the condition of a construction company and serve as a basic measurement of the company’s strength or weakness. To Creditors like Banks and Sureties, these statements are an essential underwriting tool when making decisions like bonding to support the Contractor. The ability to read and understand these statements is an extremely valuable management tool.

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Topics: Surety Bonding

How Bonded Principals Respond to Labor & Material Payment Bond Claims

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A surety bond is a three-party contract between the Surety, the Principal, and the Obligee. The Surety is the party that issues the Performance Bond along with the Labor and Material Payment Bond, which promises to answer for the default of the second party—its Principal. The Principal, in many cases, is a General Contractor. Typically, a Surety will become aware of any project problems when claims are made against the Payment Bond. This includes allegations of unpaid subcontractors and material suppliers.

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Topics: Surety Bonding

A General Guide to Surety Bonds

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Sureties are a specialized division within the insurance industry that work with Contractors to underwrite and provide bonds. When working on a construction project, you may be asked to provide a bond. A bond is a three party agreement between the Surety, the project Owner, and the contractor on the project.

There are several different types of bonds, but each is written to guarantee certain contractual obligations and to guarantee the contractor’s duties to the Owner-provided that the Owner fulfills its obligation to the contractor. Below is a list of the most frequent types of bonds:

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Topics: Surety Bonding

Not All Surety Bond Programs Are Created Equal

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Surety bond programs are not a one-size-fits-all for construction companies. This is the reason why we see hundreds of surety companies in the marketplace nationwide, each having their own carved-out niche.

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Topics: Surety Bonding

How to Increase Bonding Capacity For Contractors

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Often for Contractors, the time comes when you look at the upcoming bids list and wonder how you can qualify for the larger jobs that your competitors routinely go after. Bidding on larger jobs does require some planning. Here are some suggestions on how to increase your bonding capacity while still growing your company’s profitability.

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Topics: Surety Bonding

How Succession Plans Impact Your Surety Program & Credit Facilities

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You have spent years building your company to the success it has now, but what happens when you want to retire? Figuring out how to carry on your legacy and transition ownership can be a challenge! This is not a decision you can rush into, and it’s important to understand the different succession options you have.

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Topics: Surety Bonding

6 Ways Your Surety Broker Should be Focusing on You!

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As a business owner, your company’s customer service is one of the keys to your success. The service that you should expect from your Surety Broker should be no different. Below are some of the best practices that your broker should be following.

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Topics: Surety Bonding

Top 5 Ways a Surety Broker Impacts Your Company

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Maintaining a solid surety program can be vital to your company’s success. It is important that your Surety Broker understands your business, so they can advise you on how to maximize your bond program and the overall profitability of your company. Here are 5 ways your Broker can truly impact your company.

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Topics: Surety Bonding

How Surety Bonds Work in Default

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A surety bond can cover both an owner and a contractor when there are any issues interfering with the completion of a project. When a trade contractor first gets licensed, they are required to obtain a contractor bond that helps protect customers from unfinished work.

Default is an unfortunate aspect of the construction industry, and it is important to understand why default occurs and what happens when it does.

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Topics: Surety Bonding