Rancho Mesa's Lauren Stumpf and Director of Surety Matt Gaynor discuss the key things business owners need to know before their annual surety meeting.

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Director: Alyssa Burley

Host: Lauren Stumpf

Guest: Matt Gaynor

Producer/Editor: Megan Lockhart

Music: "Home" by JHS Pedals, “News Room News” by Spence

© Copyright 2022. Rancho Mesa Insurance Services, Inc. All rights reserved.

transcript

[Introduction Music]

Alyssa Burley: Hi! This is Alyssa Burley with Rancho Mesa’s Media Communications and Client Services Department. Thank you for listening to today’s top Rancho Mesa news brought to you by our safety and risk management network, StudioOne™. 

Lauren Stumpf: Welcome back everyone, this is Lauren Stumpf, Media Communications and Client Services Specialist with Rancho Mesa. My guest today is Matt Gaynor, Director of the Surety Department at Rancho Mesa. We will be discussing the key things business owners need to know before their annual surety meeting. Matt, welcome to the show.

Matt Gaynor: Great to be back in the studio, Lauren.

LS: November is the month that you meet with our contractor clients to discuss how the current year will end up and begin planning for the next year. And, you touch base regarding the items our bond carriers will want to hear about when you and clients are at their annual meeting (after the 12/31/22, when financial information is available). Why is this important to prep your clients before they go into the meeting with the bond carrier?

MG: That’s a great question, Lauren. Similar to having an open book test, if our contractor knows in advance what will be requested, they can prepare accordingly and anticipate any “red flag” type items that might be of concern for the bond company. 

LS: What kinds of things do you recommend clients know before they go into that meeting?

MG: So first, our clients should review the items on their balance sheet with an emphasis on cash, accounts receivable, borrowing against the bank line of credit, and equity. Another document to review: the aging schedule of accounts receivables will be very helpful to determine what amount is in excess of 90 day collections. Next, they should be familiar with the revenue and net profit or net loss from the income statement to reflect if 2022 was a profitable or losing year. Also, a discussion of any Paycheck Protection Program (the PPP money) that was loaned to the contractor and if the entire amount was forgiven in 2022.

LS: Ok, that makes sense. Our clients should fully understand their company’s financial situation before they meet with the surety. How familiar with the details of their contracts should they be?

MG: The surety will review the work in progress and completed contract schedules to discuss which projects were successful and others that lost money. Our contractor will need to be prepared to provide additional detail on any problems connected with losing projects and steps taken to correct this on future work.

LS: Will the surety ask about potential projects or bids that haven’t been awarded, yet?

MG: Yes, they’ll want to know about potential new opportunities you can anticipate in 2023. For example, will any of these projects exceed your current program, will they contain work outside your normal scope or geographic territory? Again, we need to make sure they’re prepared to address how they will manage additional risk that may be a concern to the bond company. Also, we’ll want to discuss tax planning.  Think about what additional withdraws they anticipate to cover taxes, etc.

LS: Those are all great tips. If a contractor knows their numbers and can answer the bond carrier’s questions, I’m sure the meeting will be much more productive. Matt, if listeners have questions about their bond program or how a bond carrier might analyze their 2022 financial information, what's the best way to get in touch with you?

[Outro Music]

MG: So, I can be reached at (619) 937-0165 or mgaynor@ranchomesa.com.

LS: Matt, thank you so much for joining me in StudioOne™.

MG: Thanks Lauren, always a pleasure

AB: This is Alyssa Burley with Rancho Mesa. Thanks for tuning in to our latest episode produced by StudioOne™. For more information, visit us at ranchomesa.com and subscribe to our weekly newsletter.