As 2013 comes to an end, it’s the slowest time of the year for most construction companies. It’s also the slowest time of the year for bond agencies. Which makes it the BEST time for contractors and their surety agents to strategize for 2014. This down time for contractors can be filled with meetings with the critical partners of their company – bond agent, CPA, banker, attorney, insurance agent, etc.
Contractors with a current bond program
With regards to year end strategies for a contractor and surety professional, many topics should be discussed including:
- Recap of the year – How contractor performed, jobs that went well, jobs that did not, lessons learned, etc.
- Retained earnings vs shareholder distributions – Most contractors consult their CPA but contractors that understand the importance of bonding also consult their bond agent. This conversation needs to take place.
- Major equipment purchases – Cash flow is a critical the bonding company. A contractor needs to think about this when deciding on major equipment and vehicle purchases.
- Financial presentation – Every contractor is different but depending on the size of performance bonds needed, upgrading or downgrading financial presentation needs to be discussed.
- Continuity plan – Every company should have one though many do not. A continuity plan should be made and put in writing.
- 2014 outlook – What performance bond needs does the company project? Are they expanding or contracting? General outlook for the year.
A surety professional is an extension of the contractor’s company. With this in mind, it’s easy to see why the above discussion topics, among others, are crucial to have at least annually. If you are a contractor, be sure to have these meetings to maximize bond capacity and strengthen your relationship with your bond agent.
Contractors seeking a bond program
For those that do not have a bond relationship or looking to make a change, many programs are available to get a contractor a bond line established. Each company’s needs are unique, along with its creditworthiness. Call us today at 877-654-2327 for a 10 minute consultation to see what program is best for your company.