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Help contractor clients better understand the financial data they share with the surety team using this “Guide to Contractor Financial Statements” from NASBP CPA Advisory Council firm CLA.
The Guide reviews different types of revenue recognition and describes common financial ratios for contractors. These are vital as contractors plan for the future of the company, including managing budgets, securing funding and bonding capacity, and taking on bigger projects.
There are two important lists in the Guide that bond producers can share with their contractor clients to help identify areas for improvement. First is a list of red flags in a contractor’s financials. Keeping these in mind can help a contractor catch problems earlier. The other list offers common causes of contractor failure, giving a contractor top priority items to work on to avoid insolvency.
Finally, the Guide shares example financial statements and a handy glossary of construction accounting terms to improve understanding.
