How to Prepare Underwriter-Ready Financials for Bonding
Underwriter-ready financials are statements a surety can rely on without major adjustments. They are accurate, on time, prepared on a percentage-of-completion basis, and supported by a WIP schedule that ties out. Contractors who get this right usually move through underwriting faster and are better placed to ask for higher bond limits.
Step 1: Keep Your Books on an Accrual Basis
Sureties want accrual, percentage-of-completion financials. Cash-basis books hide what you owe and what you have earned. Convert before year end, not after.
Step 2: Tie the WIP Schedule to the General Ledger
Revenue, cost, and over and underbillings on the WIP should match the balance sheet and income statement. A WIP that does not tie is one of the first things an underwriter questions. New to WIP? Start with What Is WIP Reporting and Why Is It Important for Contractors?
Step 3: Use the Right Level of CPA Statement
Many sureties expect a CPA-reviewed statement for smaller programs and an audit for larger ones. Ask your surety agent what your program requires, and use a CPA who knows construction.
Step 4: File Your Statements on Time
Sureties typically expect year-end statements within about 90 to 120 days of year end. Ask your agent for your surety's deadline. Late statements can delay bonds.
Step 5: Clean Up the Balance Sheet
Collect or write off old receivables
Remove or explain related-party receivables
Separate personal and business assets
Explain any large or unusual items
Step 6: Provide Interim Reporting
Quarterly or monthly financials and WIP show the surety how the year is going. They also reduce surprises at year end.
Step 7: Tell the Story Behind the Numbers
Give your surety context: backlog, key jobs, profit fade explanations, and your plan for the next year. Numbers with a clear story build trust. For more on what underwriters look for, read What Makes a Strong Contractor Financial Statement?
How SuretyCFO Helps
SuretyCFO prepares bonding-ready financials and monthly WIP for commercial contractors with $5M to $50M in revenue. We are based in Old Bethpage, New York, and work virtually with contractors nationwide.
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