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What sureties look for, why it matters, and how your financials tell your story A contractor’s financial statement is more than a tax document. For a surety, it is the lens they use to assess discipline, stability, and the contractor’s ability to take on larger work. Good numbers build trust. Sloppy numbers raise questions. The strength of your financials often dictates the size of your bonding line more than any conversation you have with your agent. Below is a simple breakd

Risk is part of every construction project. There are tight margins, complex schedules, multiple trades, and unpredictable conditions. Even well-run contractors face challenges with cash flow, supply chains, or unexpected overruns. Because the stakes are high, owners, lenders, and general contractors need dependable safeguards in place. This is where surety bonds play a central role. They are not just a contract requirement. They are a risk-management tool designed to keep pr

Project financing hinges on one core idea: everyone involved wants certainty. Owners want assurance the job will be completed. Lenders want to know the project will not fall apart halfway through. Contractors want predictable cash flow so they can manage work without financial strain. Surety bonds sit right at the center of this ecosystem. Many people think of bonds as simple “insurance requirements,” but in reality, they play a direct role in how money flows, how risk is man

Most people think accounting is just accounting. Track income, track expenses, run reports, and pay taxes. For ordinary businesses, that usually works. Their revenue comes in regularly, their bills go out regularly, and their financial story is fairly predictable. But the moment you step into construction, the rules change. And when surety bonding enters the picture, the difference becomes even more dramatic. Contractors do not operate on steady sales. They operate on project

Most contractors focus on the same things when they think about bonding: strong financials, clean books, and a solid CPA review. These matter, but they are not what actually unlocks bigger bonding capacity. The real advantage comes from something far less talked about: your ability to show where your business is going, not just where it has been. That is the role of financial forecasting, and it plays a much bigger part in bonding success than many realize. Sureties do not wa

Surety CFO When contractors review their bonding file, one line item always draws attention from the surety: contract assets, often called under-billings. To many contractors, this number just reflects work completed but not yet billed. But to a surety, contract assets reveal far more. They show billing habits, how well jobs are managed, how accurate your financial reporting is, and how reliable your cash flow will be. This is where the right financial professional becomes es

Most contractors focus on revenue growth, but surety underwriters focus on something much simpler: how well you protect your cash and working capital. The challenge is that many construction companies lose bonding capacity through small financial leaks that do not show up immediately on the P&L. Here are three of the most damaging leaks that quietly reduce your bond line. 1. Job Costing Gaps That Hide True Margins A project can look profitable on paper and still drain cash if

Understanding Profit Fade: Why It Happens and How Contractors Can Prevent It Profit fade is one of the most important concepts every contractor should understand because it tells you how well a job is performing from start to finish. Bonding companies pay close attention to it, but it is just as valuable for you, the contractor, because it reveals whether your estimating, job costing, and project management systems are working the way they should. This post breaks down profit

Most people hear “accounting” and think it is all the same thing. In construction, that could not be further from the truth. There are layers to the financial side of your business, and each layer plays a different role. Some keep your books clean, some create financial reports, and others guide long-term decisions like bonding capacity and growth planning. If you understand the layers, you can understand where the gaps are and who you need as your business scales. Let’s brea

Bonding is often viewed as a box to check before bidding on a project, but it plays a much bigger role in shaping how a construction business grows. Your bond line is one of the clearest ways the industry measures your stability, discipline, and long-term potential. When your bonding capacity increases, it creates opportunities that go far beyond a single job. Bonding Reflects Financial Strength Surety underwriters look past revenue. They study the health of your working capi

HOW JOB BORROW AFFECTS YOUR CASH FLOW, MARGINS & BONDING Job borrow  is one of the most overlooked financial risks in construction. It does not show up on your bank statement, but it appears clearly on a WIP schedule and can influence everything from cash flow to profitability to bonding capacity. If you are scaling your contracting business, understanding job borrow is critical. What Is Job Borrow? Job borrow happens when cash from one project is used to pay costs on another

Where tax planning meets bonding strength Most contractors see bonding and taxes as two separate parts of the business. One helps you win work. The other reduces your tax bill. In reality, they support each other more than most contractors realize. When both are aligned, you strengthen your balance sheet, increase your bonding capacity, and free up cash for growth. This is where smart tax planning and bonding strategy work hand in hand. Why Bonding and Tax Planning Are Connec

Cash flow is one of the biggest pressures in construction. You can show a strong pipeline and solid profits on paper, but if cash is tight, everything feels harder. Payroll becomes stressful, suppliers get impatient, and bonding capacity takes a hit. The good news is that cash flow is manageable when you focus on the right levers. Here are four simple but powerful ways contractors can strengthen cash flow and create more stability year-round. 1. Accelerate Collections Contrac

For many contractors, tax time is all about lowering taxable income. But in construction, what looks good for taxes can often look bad on your financial statements. When bonding companies, banks, and potential partners review your books, they do not care how small your tax bill is—they care about your working capital, net worth, and profitability trends. The truth is simple: over-deducting can cost you far more in bonding and credit opportunities than it saves you in taxes. T

In construction, taxes are more than a year-end chore—they are a powerful financial lever. The right tax strategies can directly improve your working capital, net worth, and ultimately, your bonding capacity. A strong balance sheet is what sureties and lenders look at first, and proactive tax planning can make all the difference. 1. Separate Tax Savings From Cash Flow Contractors often use tax write-offs to reduce taxable income, but overaggressive deductions can weaken your

Cash VS Accrual method for contractors Choosing the right accounting method is one of the most important financial decisions a construction company makes. The method you use affects not just how profit is reported but also how your bonding company, CPA, and banker evaluate your business. For contractors, understanding cash vs. accrual accounting  is essential for financial management, tax planning, and surety bonding success. 1. The Cash Method: Simple but Limited Under the c

Profit on the Profit & Loss Statement Is Not Equal To Money In the Bank Why Profit Is Not Equal to Cash for Contractors It is one of the most confusing financial truths in construction: a contractor can be profitable on paper but still struggle to make payroll or pay suppliers. The reason is simple—profit and cash flow are not the same. Understanding the difference is essential for managing working capital, protecting bonding capacity, and keeping your business financially st

Understanding the Role of Financial Statements in Determining Your Bonding Capacity with SuretyCFO Why Financial Statements Matter for Bonding When a contractor applies for a surety bond, the underwriter wants to know one thing: Can this business handle the job and the cash flow that comes with it? Your financial statements are how you prove that. They give sureties a clear picture of your company’s stability, discipline, and ability to finish what you start. Strong financial

Understanding the Impact of Working Capital on Surety Bond Approval: Key Factors and Insights from Surety CFO Understanding Working Capital When contractors apply for surety bonds, underwriters are not only reviewing revenue or profitability—they are looking at financial stability. The most important indicator of that stability is working capital, which measures your company’s short-term ability to pay bills, fund projects, and absorb unexpected delays or costs. Working capit

Front-Loading the Schedule of Values: Cash Flow Strategy or Risky Move? Cash is king in construction. Managing cash flow throughout a project is critical to completing it successfully. Contractors often face long payment cycles, retainage, and heavy upfront costs—all of which can strain liquidity. To manage this, many turn to a practice called front-loading the schedule of values (SOV). It can be a lifeline for cash flow, but it also comes with real risks. What Is a Schedule