10:53
Faizan
Being in the right place, or the wrong place, can make all the difference. In the world of surety bonding, particularly contract bonds, timing can play an important role.
Here is a typical scenario we go through often. It is a question of timing:
The client comes to us to get their bond account set up for the first time. We send over the "laundry list" of documentation that is normally required. It's a bit daunting. For companies that have never been bonded, they probably do not have all the info readily available. They must gather documents, other must be filled out, they must be scanned and shipped. There are better ways to spend a Friday evening!
The cause of this activity is usually that the first bonded project has popped up. We had a case like this recently where the project was being negotiated. No bid bond was required. If the effort was successful, the contractor would need a bond. If not, the bond monster goes back to sleep.
Our new client seemed unconcerned about the bond. They didn't want to take the time unless they won the project. Only then would they find out if it is easy, difficult, or impossible to get the bond!
For this applicant, the project comes first - then the bond. Is this a good way to handle the timing? Maybe not, because sometimes the first bond is a harder, slower process than expected!
Let's look at some of the aspects that could make the first bond take longer than expected. We are assuming this is for a $1 million project:
1. Financial Information - The underwriters will request business financial statements, not just tax returns. Not all companies automatically prepare these. If the year-end date is not close, it can be very inconvenient to go back and reconstruct the year end-books.
2. Accounting Methods - companies that have been using cash method statements will now find they must go back and re-issue using a different accounting method to satisfy the underwriters.
3. CPA - Don't have one? You will need to engage one and allow time for their procedures.
4. Accounting Presentation - If a CPA Compilation has been the norm, it could be necessary for the report to be revised and re-issued as a Review. The CPA will need time to perform these additional services.
5. Outside References - These are sent to creditors and vendors for handling, then you wait for them to respond.
Here is a typical scenario we go through often. It is a question of timing:
The client comes to us to get their bond account set up for the first time. We send over the "laundry list" of documentation that is normally required. It's a bit daunting. For companies that have never been bonded, they probably do not have all the info readily available. They must gather documents, other must be filled out, they must be scanned and shipped. There are better ways to spend a Friday evening!
The cause of this activity is usually that the first bonded project has popped up. We had a case like this recently where the project was being negotiated. No bid bond was required. If the effort was successful, the contractor would need a bond. If not, the bond monster goes back to sleep.
Our new client seemed unconcerned about the bond. They didn't want to take the time unless they won the project. Only then would they find out if it is easy, difficult, or impossible to get the bond!
For this applicant, the project comes first - then the bond. Is this a good way to handle the timing? Maybe not, because sometimes the first bond is a harder, slower process than expected!
Let's look at some of the aspects that could make the first bond take longer than expected. We are assuming this is for a $1 million project:
1. Financial Information - The underwriters will request business financial statements, not just tax returns. Not all companies automatically prepare these. If the year-end date is not close, it can be very inconvenient to go back and reconstruct the year end-books.
2. Accounting Methods - companies that have been using cash method statements will now find they must go back and re-issue using a different accounting method to satisfy the underwriters.
3. CPA - Don't have one? You will need to engage one and allow time for their procedures.
4. Accounting Presentation - If a CPA Compilation has been the norm, it could be necessary for the report to be revised and re-issued as a Review. The CPA will need time to perform these additional services.
5. Outside References - These are sent to creditors and vendors for handling, then you wait for them to respond.
Posted in: business
