Mike Foster answers for Construction Executive
April 16, 2012
EVP MIke Foster answers question for Construction Executive Magazine
Executive Vice President Mike Foster answered a question for Construction Executive Magazine's Special Section: Executive Insights from Leaders in Insurance and Bonding April edition. Construction Executive reached out to leaders at sureties and insurance companies who specialize in construction for advice and insights.
How can a CPA firm help increase bonding capacity so contractors can compete for larger projects?
Michael P. Foster
Executive VP, Underwriting
Merchants Bonding Company
In order for contractors to be successful, it is critical that they surround themselves with a team of qualified professionals who are committed to assisting the contractor achieve their long-term goals. This includes a banker, lawyer, surety company and agent, and a capable construction-oriented CPA. These professionals must first understand the goals of the contractor and then communicate with the contractor and each other on how best to get there.
If the contractor wants to increase its bonding capacity, one of the most important items the surety will use to evaluate the contractor is financial information. It is critical that fiscal year-end information be completed on a timely and accurate basis, and include necessary supporting notes and schedules.
The year-end statement provides the primary picture of the financial information the surety will use to determine bonding capacity. In addition, the contractor must have the ability to generate timely and meaningful financial information throughout the year.
Construction accounting is a unique endeavor. Your accountant should help you establish your internal procedures. They also should be able to assist with tax planning that will not detract from the balance sheet, which could have a negative impact on your surety capacity.
The surety wants to make sure you know where you are financially and that you can communicate this information to the surety on a timely and accurate basis. Your CPA should be able to help you achieve these goals.
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