Authored by Charlie Holleman for PriceKubecka, and Joe Schwartz for Alter Surety Group
When you first got your construction business off the ground, finances were probably pretty simple. Maybe you were handling the books yourself, filing taxes on a cash basis, and bonding wasn’t even on your radar yet. But once you start chasing bigger jobs, things change fast.
To win more complex projects, your financial house must be in order. That means getting serious about internal processes, keeping clean records, and knowing what bonding agents actually want to see. The way you manage and present your financials can make or break your bonding capacity—and your shot at the kind of work that moves the needle.
What Bonding Agents Really Want
If you want better bonding capacity, your financial package should enable the bonding agent to assess your working capital, backlog health, and whether your jobs are on track. Here’s the standard playbook:
- Accrual-basis financials (even if your taxes are cash-basis)
- A current balance sheet and P&L
- AR aging with retainage broken out
- A WIP (Work-in-Progress) schedule showing job-level performance
- 3 months of bank statements
- Clear breakdown of current vs. long-term debt
- Proper equity roll-forwards
Common Pitfalls That Hold Contractors Back
There are a few things we see repeatedly that make bonding agents nervous. None of them are hard to fix, but you’ve got to stay on top of them:
- Late or inconsistent reporting—makes it hard to trust the numbers
- Aged receivables (90+ days)—usually get tossed out of working capital calcs
- Underbillings—can flag poor cash flow or sloppy billing practices
- Sloppy submissions—missing docs, outdated info, incomplete packages
- No contract legal review—you’d be shocked how many miss dangerous clauses
- One-person-show operations—scares sureties if there’s no succession plan
Tighten these up and bonding agents will be far more confident—and supportive—when big bids are on the line.
Build Construction Financials That Bonding Agents Trust
Solid internal reporting starts with a simple rhythm: close the books monthly, reconcile your accounts, and make sure equity and debt roll forward cleanly. Not glamorous, but essential in providing financials a surety agent can trust. Here’s what to keep tight:
- Up-to-date balance sheet and P&L
- AR aging with retainage separated
- WIP schedule that reflects actual job health
- Revenue recognized using percentage-of-completion (POC)
- Overbillings (a plus); underbillings (a red flag)
- Bank balances that tie to reported numbers
The stronger your WIP and reporting process, the easier it is to prove you’re in control—and the more flexibility your bonding agent will give you.
Think of your bonding agent as your financial wingman. Give them clean, accurate info, and they’ll go to bat for you. Be proactive: send regular updates, flag big opportunities early, and don’t sugarcoat bad news. They don’t expect perfection. They just don’t like surprises.
CPA-Reviewed Financials: The When, Why, and Who
If you’re aiming for projects over $2.5M or want a formal bonding program, you’ll likely need CPA-reviewed financials.
Quick breakdown:
- Compilation: Basic formatting; no assurance
- Review: Moderate assurance; ideal for bonding
- Audit: Full testing; only needed for very large or DOT jobs
Most contractors go with a review. It hits the sweet spot: more assurance than a compilation, without the cost and complexity of a full audit. A review will include your financials, footnotes, and supplemental WIP. (FYI, sureties often flip straight to the job schedules, so make sure those are solid.)
But here’s the catch: not all CPAs speak “construction.” A construction-focused CPA knows how to build statements that bonding agents trust. They’ll structure your WIP correctly, anticipate underwriter questions, and help you scale with confidence.
Not sure if your CPA is up for the job? Ask for a sample contractor review. If they hesitate or ask you to explain what it is, it’s time to shop around.
Final Word: Start With the Foundation
If you want to grow, bonding and financials can’t be an afterthought. Build disciplined processes, work with the right experts, and keep your reporting tight. The better your numbers, the bigger the jobs you can chase—and the smoother the path to getting there.
Charlie Holleman is a CPA, Partner, and Director of Construction Assurance Services for PriceKubecka, PLLC. Contact Charlie at Charlie.holleman@pricekubecka.com.
Joe Schwartz is a Bond Agent for Alter Surety Group. Joe can be reached at joe@altersurety.com.