Soft landing… We’ve likely all heard these words with regard to the economy and the monetary policies employed to combat inflation while avoiding a “harder” recession. Bonding strategies in uncertain markets are crucial during these times. One of those economic levers being used is interest rates. The Federal Reserve is now moving carefully as indicated by the rate hold in September, but because jobs and consumer spending data continue to be strong, further adjustments may be on the docket.
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Employee Retention Credit (ERC) claims by employers are once again being processed by the IRS after a moratorium period for any credits filed after September 14, 2023. During this period, the IRS performed a large study on a group of ERC claims to help determine the next steps on remaining claims and essentially develop an audit strategy for filed claims and ERC audit risks.
With bonded work on the horizon for a new or growing company, owners may be wondering how they can get started and what programs are available for these initial bond needs, especially regarding surety bonds for contractors.
In the world of construction, navigating the financial landscape requires more than just basic accounting and banking services. Construction firms face unique challenges and opportunities, making it crucial to partner with a both a CPA firm and bank with significant construction experience. These specialized service providers understand the nuances of construction accounting and financial reporting, the allowable income recognition methods for small contractors, and the industry’s volatile nature. Here’s why these partnerships are essential for your firm’s success.
In a tightening construction market, the importance of financial planning and strategic equity retention cannot be overstated. Bonding capacity serves as a barometer for a construction company’s financial health and operational capability. Financial resources are becoming increasingly constrained due to high interest rates, increased material costs, and a tight labor market. Following a strategic financial plan is critical to maintaining a strong equity and working capital position to secure the levels of bonding capacity your business requires.
Rarely is a first bond request planned for… More often the requirement arises when a business is going through something new. New customer, new public market opportunity, or new business relationship perhaps with a union. The point is that the business is expanding and likely encountering all the administrative pains that come with growth. On top of that, the company is now navigating securing its first bond, and needed it yesterday, a real test of “Surety Bond Success.”
Maintaining availability on a line of credit facility is crucial for contractors, and Enhancing Credit Availability with Strategic Surety Solutions is a key approach to achieving this. Project demands, delayed payments, and unforeseen expenses are just three of the many cash flow challenges contractors face. Having readily available credit ensures that contractors can quickly adapt to the circumstances without disrupting their operations or having to pass on new opportunities.
The Biden administration issued an executive order mandating the use of Public Labor Agreements (PLAs) on federally funded construction projects exceeding $35 million, effective since January 2024. This aims to streamline labor practices, enhance worker protections, and ensure timely project completion. While this directive aims to foster a more organized labor market, PLAs impact bond market dynamics in multifaceted ways.
The goal of any prequalification program, especially when it comes to Subcontractor Selection Risk Management, is the evaluation of potential subcontractors BEFORE they are hired. This then lowers the risk exposure and ensures the subcontractor has the necessary resources, skills, experience, and financial stability to complete work effectively and safely.
Surety bonds generally require a General Agreement of Indemnity (GAI), a critical component in the bonding process. This article will delve into what a GAI is and why it’s considered such an essential element for GAI surety bonds.