Over or underbilling by a contractor can be a big problem for obtaining your bid and performance bonds from your surety bonding company. According to generally accepted accounting principals, contractors should report earnings based on the percentage of completion to tie together what the contractor earned and what they actually billed to show differences between the two in terms of assets or liabilities on the balance sheet.
Underwriters will see problems with contractors if there are large over or underbillings. If there are large underbillings, it’s a sign that the contractor is billing too slowly or that unapproved change orders are included in the contract price. Alternatively, if there are large overbillings, an underwriter will try to find that those are offset by something like a greater amount of cash and receivables on the other side of the balance sheet.
Contractors should keep this in mind when doing their accounting. Large over or underbillings can affect how easily you can obtain your surety bonds. Time is of the essence when you’re competing for construction projects. So why rely on someone else for your surety bonds when you can have complete control over your bonding process with Colonial Surety Company. With our Partnership Account® we give you the power of attorney to issue your own bid bonds on-demand or instantly order performance and payment bonds—all without involving an insurance agent or broker. We can also help your overall planning with better transparency, valuable business insight, and greater security.
Purchase Bid and Payment/Performance Bonds
Colonial Surety Company gives you an easier way to manage your bid and payment/performance bonds online. Having your single and aggregate limits in writing allows you to update your work on hand and adjust your bonding capacity in real time. Contact us today to get your bid and payment/performance bond today.