From The Desk Of 

Paramita Bhattacharya MBA, MS

Long Island, New York

Dear Commercial Contractor,

Surety credit is the lifeblood for contractors, surety companies want to know they are extending credit to contractors with a track record of completing successful projects.

You need to prepare financial statements, forecasts and the necessary internal reports so you can obtain the greatest amount of credit available. 

Managing a strong balance sheet is most important so your surety company will extend the maximum support it can to your company.

Presenting this information to your surety company in the way it needs and in the negotiations of your surety agreement is crucial in building confidence and successful business over the long term.

For any business to be successful, decisions need to be made based upon reliable and timely financial information.

While this is a fundamental concept that is easily understood, all too often business owners don’t receive accurate and timely financial statements and other critical financial information needed to run their business.

Many construction companies don’t have the resources or expertise to manage the financial reporting process. Redundant processes and other internal inefficiencies contribute to the lack of information.

Construction companies are required to produce interim financial information required by third parties, such as your bank and bonding company.

Tracking gross profit by job, cash flow by job, over/under billings by job, backlog schedule, work in process accompanied with accounts receivable and payable is mandatory to be sent to the bonding companies to get approved for the bonding when bidding for the jobs.

The problem is that most construction companies have a cash basis accounting system, do not have accounts payable and receivable tracked on their balance sheet, their loan balances are off. 

Not having any job costing in place does not give any visibility as to what is going on in the jobs.

The problem of having inconsistent and inaccurate accounting records, work in progress tracking and ratio analysis to measure the strength of balance sheet and working capital is quintessential for surety bonding.

That's why I decided to write my latest book...