Author, Matt Gaynor, Director of Surety, Rancho Mesa Insurance Services, Inc.

As we wind down the 2020 year, it is important for our contractor clients and prospects to start planning how the 12/31/2020 fiscal year end financial statement will look. The bond companies will use this information to set your 2021 Bond Credit Line for approval of your projects.

I recently sat down with two industry executives from Argonaut Surety, Steve Parnas, Vice President and Contract Practice Leader, and James Bluzard, Vice President and Chief Underwriting Officer-Contract to discuss the required financial information to ensure our contractors maximize their available bond credit going into 2021. Listen to the entire podcast Episode 56 “How to Get Your Surety Bond Account in Shape for 2021” on your favorite app.

Below are a few excerpts from our recent Podcast:

Rancho Mesa Matt Gaynor: “Although you track our contractor’s financial numbers throughout the year - how important is the 12/31 year-end financial statement?”

Arogonaut James Bluzard: “The 12/31 statement is typically a CPA-prepared statement viewed as the most important statement from the surety underwriter perspective since it is coming from an independent third party. Given the uncertain economic times we are in, and with COVID out there, getting that statement out and into your underwriters hands earlier rather than later will be really important to let the underwriters see how 2020 closed and also to get a forecast regarding 2021, as well.”

Rancho Mesa Matt Gaynor: “Within the CPA document, what are some of the specific items and schedules you are looking to analyze?”

Argonaut Steve Parnas: “We actually start our analysis at the back of the document looking at the work in progress and completed job schedules, which gives us insight into the performance of the past year along with how they are positioned going forward. Also, looking at the receivable and payable schedules to see how they are collecting their money and paying their bills.”  

To get a better understanding of how the bond carriers will analyze your underwriting documents during these uncertain times, please contact me at (619) 937-0165 or mgaynor@ranchomesa.com.