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7 Sure Short Ways to Lower The Costs of Construction Surety Bond

Written by Posted On Friday, 05 April 2019 03:52

Reducing the cost of construction surety bonds can help subcontractors reduce their financial burdens. Here are 7 tips to help reduce cost of surety bonds.

Running a construction company is not easy. Especially managing physical stress related and adding in the financial needs to run a business make it more difficult. Fortunately, there are some ways to lower these burdens, particularly the cost of surety bonds. Here are a few important directions.

Learning how bond pricing works

Surety bonds are confusing, however as soon as you learn how pricing works, finding the best suitable bond for your project and budget is a breeze. The price of surety bonds based on a percentage of the total amount of the surety bond needed, usually ranging from 1 to 10 percent. Subcontractors with less experience, a few claims on previous bonds or past financial missteps will pay higher percentages as compared to those with a solid history.

Knowing your credit

After learning bond pricing, it’s helpful to learn how bond percentages rely on credit history. Credit history indicates how much risk is posed to new creditors, such as business and personal lenders, credit card companies and the like. When you had bankruptcy, have missed past payments or had accounts find their way to collections, you have a bad credit history. The more negative history, the higher the percentage price of the bond.

Reducing negative points

When you do not have a favorable credit, you are not unfortunate for getting cost-effective surety bonds. Begin by checking for errors in your credit report and disputing those as required. By this, you can bring your credit score and report up quickly. Then find what else is making your credit negative, such as collections, missed payments, and tax liens are the most significant factors. Pay off what you owe and use credit wisely.

Organize Financials

Having your ducks in a row convince surety bond agencies to give you a more favorable price on a new bond. So have organized records for previous payments, projects, liabilities, and assets in one place. An organized bookkeeping system shows that you are responsible for and serious about your business, even when you have negative credit.

Collect what is owed to you

Having a process for collecting what you owed is another way to ensure low bond pricing. Often, these facts are included in the records of previous payments, projects, liabilities, and assets. If you don’t have them readily on hand, collect them before applying for new surety bonds to give a clear picture of your business to the agencies.

Wisely manage claims

As personal credit and financial statements are essential for surety bond pricing, past claims against a bond can do serious damage for subcontractors. Have a system in place to work with job owner to avoid claims when possible.

Have access to a group of bond providers

Last but not the least is to make sure that your surety bond price is as lower enough to work with suitable surety bond agency. Companies that provide access to various bond providers are in better position.

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Mark Hourany

www.leahsfitness.com/

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