By Jamie Collum and Andrew Cartwright for Daily Commercial News
As explained in the last Surety Corner, providing accurate and timely interim financial reporting is a key factor in successfully growing your bonding facility.
The surety company wants to know throughout the year how your company is performing financially. When the results are positive this can lead to increased surety support. However, from experience, bond companies know that the internal financial reports are not always accurate and so the sureties often request a corresponding work in progress or work on hand report to allow for a deeper analysis of the financial report.
This report is produced at the same date as your financial statements and requires for each job the contractor input estimated costs remaining, costs incurred to date, total revised revenues to date and total billings to date. Using these numbers, the underwriter will be able to get a completion percentage for each job based on costs which they can then use to calculate the earned revenue. By comparing earned revenue to the actual amount billed, the underwriter can determine if the contractor is under or over billed and check to see if this is reflected on the financial statement.