| Bonding: Beyond Financial Ratios
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by Danny Parrish
Improving your financial position is vital when it comes to bonding. However, there is another important element to securing a bond or increasing your bonding capacity that is often overlooked by contractors: relationship building. In addition to giving attention to your financial statement, you should also consider strategies that will enhance your relationship with your surety (or insurer).
The easiest way to do this is to have your agent or broker schedule regular meetings with your surety. At these meetings, discuss the full range of your company management efforts and expertise. Present information about projects that have been awarded to you, recognitions that you have received and ways that your company helps the community. Your goal is to impress your surety with the strengths of your company and your people at all levels – from senior management to field staff.
Underwriting decisions are made on more than financial ratios. By showcasing your abilities and giving your surety a good look into the totality of your company, you’re giving them a reason why they should issue you a bond – not a guess at why they should not.
Danny B. Parrish is President of Parrish Consulting Group, which provides a wide range of consulting and temporary services to construction companies in the areas of accounting, finance, strategic planning, marketing, human resource and information management. A former national president of CFMA, Danny is a frequent speaker at national and regional industry events. His experiences in the A/E/C & Design-Build environment have given him opportunities to serve as an advisory board member for organizations seeking outside expertise and assistance and as a consultant to insurance agencies, software enterprises and accounting firms seeking insight into the construction financial management environment. For more information, call 972-567-2381 or e-mail dbparrish@msn.com.
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