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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

How to increase bond capacity Navigating the complexities of construction finance can be daunting—especially when financial red flags threaten your bonding capacity.  For contractors and construction business owners, understanding these warning signs is essential to maintaining financial health and qualifying for larger projects. From cash flow issues to weak accounting systems, these red flags can quietly erode your company’s credibility with sureties and underwriters. This

Why Accurate Forecasting Is Key to Keeping Bonding Open In the construction world, bonding capacity is more than a line on a financial statement—it’s your ticket to winning new business, scaling operations, and establishing trust with project owners. But one factor that often gets overlooked in maintaining and expanding bonding capacity is the role of job cost forecasting. Let’s break down how these two elements are connected and why improving your forecasting practices can d

If you’re a contractor, your bonding line is one of your most valuable business tools. But to keep it open—and to grow it—you need to pass through an annual ritual: the CPA-reviewed financial package and bonding review. So what exactly are CPAs and underwriters looking for? What goes on behind the scenes? Let’s break it down. 🧾 The Role of the CPA in Surety Reviews Your CPA isn’t just compiling numbers. A good construction CPA is preparing a financial narrative for your sure

Navigating the construction industry as a business owner comes with its unique set of challenges, but achieving bonding can unlock new opportunities and foster growth. Taking the leap from a startup to bondable status is a pivotal contractor journey, one that demands strategic planning and informed decision-making. This comprehensive guide will walk you through the essential steps of the bonding process, offering construction business tips to ensure your success. As you embar

In commercial construction, scaling up to bigger projects isn't just about having the right team or equipment — it’s about proving you can deliver. And that’s where surety bonds come in. Surety bonds aren’t just a box to check for public work or a formality for general contractors. They’re powerful financial tools that speak volumes about your company’s credibility, capability, and financial health. When leveraged strategically, surety bonds can unlock access to larger, more

Navigating the construction industry can be as challenging as building a skyscraper, especially when it comes to securing surety bonds. If you're a contractor looking to boost your bond capacity, you're not alone. Many in the industry find themselves puzzling over financial strategies for contractors that truly work. From working capital management to retainage management tips, there are proven methods to enhance your financial standing and improve your cash flow. In this pos

In the competitive world of construction, establishing robust relationships with bond underwriters is a crucial step for contractors seeking to enhance their bonding capacity. At the heart of this relationship lies the importance of financial reporting, a vital component that not only underscores a contractor's financial health but also instills confidence in surety bonding agents. For contractors, mastering the art of financial analysis and demonstrating a clear understandin

And How to Fix Them Before They Derail Your Projects Cash flow issues are one of the top reasons even profitable contractors struggle to grow. The problem is rarely about earning enough—it is usually about when cash moves  versus when work happens . Below are three common mistakes that drain cash and create unnecessary stress—along with a few ways to fix them. 1. Delayed Billing: Financing the Project for Free You complete the work. The crew moves on. But the invoice sits on