HOW SPM WORKS WITH SURETY AGENTS: THE WIP HISTORY A BOND REQUEST IS READ AGAINST.
A surety sets limits from the balance sheet and not from revenue: working capital of typically 20 percent or more of the largest single project, net worth with strong cash and receivables, a WIP schedule with defensible percentage of completion math, and a three year trend. A contractor with 24 months of monthly WIP whose projections stayed within 5 percent of actual closeouts gets higher limits and lower collateral than an otherwise identical contractor without that history. When an agent brings a principal to SPM, SPM builds that monthly WIP from job cost, and the agent continues to work with the surety.
This page is for surety agents and brokers with subcontractor principals. It covers the signs that a principal will struggle at the next bond request, how the work goes from the first call, and what the agent gets back.
WHAT IT MEANS.
When a surety agent or broker brings a subcontractor principal to SPM The Construction CFO, SPM builds the monthly job costing, WIP schedule and books that the surety underwrites from, and the agent continues to work with the surety.
The principal remains your client and the surety makes the underwriting decision. SPM builds the records the underwriter reads.
FIVE SIGNS A PRINCIPAL WILL STRUGGLE AT THE BOND REQUEST.
The WIP schedule is built once a year, for the bond request
Sureties require a current schedule calculated from actual job cost with the cost to cost method. A schedule built in the week before a renewal has no history behind it, and the underwriter can see that.
The schedule and the books close on different days
When the WIP schedule and the balance sheet are built from different cutoffs, the overbilled column does not match the working capital on the balance sheet. An underwriter reads that as a reporting problem and charges for the doubt.
Working capital comes from overbilling the jobs
Billing ahead of progress puts cash in the account and creates a liability that reverses as the work is built. A heavy overbilled position with a current ratio down near 1.3 is working capital that comes from overbilling the contractor's own jobs.
One good schedule and no trend
A surety reads three years of financials. One accurate schedule is not a trend, and revenue growth without matching balance sheet growth does not add capacity.
Projected margins that the closeouts do not confirm
Projections are compared with actual closeouts. A contractor whose final margins repeatedly miss the projection loses credibility on every schedule that follows, and the limits stay where they were.
WHAT IT LOOKS LIKE IN DOLLARS.
A surety typically expects working capital of 20 percent or more of the largest single project. Bonding capacity follows from the balance sheet, so revenue growth on its own does not raise it.
Sureties commonly set single project limits at 10 to 15 percent of net worth and aggregate limits at 20 to 25 percent of net worth. They go above those ratios for contractors who can show financial management sophistication, and the WIP track record is how that is shown.
Compiled financials with $400K in working capital and $1M in net worth support a single project of $500K to $1M and an aggregate of $1.5M to $3M.
FROM THE FIRST CALL TO THE MONTHLY WIP.
The contractor books the call from the scheduling page. Josh asks about cash, job costing and margins. Nothing is sold on that call and nothing is proposed.
When SPM can help, the contractor books a longer second call. The proposal covers the scope for that contractor and the published monthly rate for its revenue band.
SPM migrates the books, sets the job cost structure and builds the first WIP schedule from actual job cost with the cost to cost method. The schedule and the books close on the same day, so the overbilled column matches the working capital figure the underwriter reads. From then on each closed job is compared with the margin projected on the schedules before it, and that log is the accuracy history a surety asks for.
The month is closed on a schedule, the WIP schedule is built from job cost, and the owner meets with SPM once. The meeting ends in decisions with dates. The owner's own time is about five hours a month.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $2,900 | $1,000 |
| $1M to $3.5M | $2,600 to $3,900 | $1,500 |
| $3.5M to $6.5M | $3,800 to $5,700 | $3,000 |
| $6.5M to $9.5M | $5,100 to $7,100 | $4,500 |
| $9.5M to $12.5M | $6,100 to $8,500 | $6,000 |
| $12.5M to $15.5M | $7,400 to $11,000 | $7,500 |
| $15.5M to $18.5M | $9,400 to $13,500 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
You stop touching the books.
Everything in Core, and we do the bookkeeping and the controllership as well. Your office stops answering coding questions and stops fixing a reconciliation that will not balance on the last day of the month.
We do the books. No payroll.
Every job shows its margin while it is still open.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the books, the job costing, and the software. No payroll.
FREQUENTLY ASKED.
