Two reminders for you:
- One week until our next Free CE Zoom Webinar. On Monday 11/1/21 you can attend “Surety Bonds 101” from your home or office computer. Three free continuing education credits for you. Check it out: Click for info and to register.
2. It’s not too early for your contract bond clients to start thinking about 12/31, which may be their fiscal year-end.
What are the key points?
a. CPA year-end financial statement or in-house prepared FS? Larger bonds require a CPA statement (i.e. starting around $1,000,000) Make sure the CPA has other construction clients – knows how to prepare these documents correctly.
b. Compilation, Review or Audit? Larger bonds require at least a CPA Review (starting around $2,000,000)
c. Accrual and Percentage of Completion are the most common accounting methods we see. Cash method is not acceptable for surety underwriting or banking. Leaves out too much relevant info.
d. Profits, taxes, net worth increases: Your clients need to think about the importance of bonding (growing the balance sheet) vs. controlling the tax bill. These are opposite goals.
e. Don’t borrow money from the company. Pay back borrowed money ASAP. “Stockholder Loans Receivable” directly hurt the bond account.
f. Preview the 12/31/ FS: Important to instruct the accountant to make a “draft fiscal year-end statement” for discussion with the surety. This is the best opportunity to manage the year-end numbers to assure the desired amount of surety credit will be available in 2022.
And one more reminder: FIA Surety is THE Site and Subdivision Bond Market. Need one? Call us! 856-304-7348.