1. Surety bonds can free up a contractor’s capital and credit.
The alternative to providing a bond is often a cash deposit, a letter of credit or other cash invasive options. These alternatives prevent the contractor from accessing and using the cash until it has fulfilled its contractual obligation. Bonds, on the other hand, are cash-flow friendly, and therefore help free up funds needed to operate the contractor’s business.
2. You can tell a lot about someone by their friends.
Having a surety facility positions the contractor above all those who do not. Having a surety partner means that an independent party has taken a look at a contractor’s operations and is satisfied that they are stable, experienced, and well managed. Securing a surety facility with Trisura places a contractor a step above their competition.
3. Everyone can benefit from a surety bond.
Despite the best efforts of the primary constructor, the failure of a sub-contractor can seriously derail a project. Sometimes it is useful for the contractor to ask for bonds from its subcontractors and suppliers in order to protect itself from subcontractor/supplier failure and the inevitable cost overruns that result. This is true for General Contractors that subcontract their work and for prime subcontractors that subcontract portions of their work. Just because no one is asking the primary contractor for a bond doesn't mean they can't ask their subcontractors/suppliers for one. It's inexpensive protection that makes good business sense!
Don't forget about Labour and Material Payment Bonds. Subcontractors at any level should ensure the contractor above them has posted a Labour and Material Payment Bond. This vital yet often forgotten security will protect accounts receivable.
4. Calling your surety shouldn't be considered bad.
It's in everyone's interest to complete a job on time and on budget. If contractors find themselves in a tricky situation, use Trisura as a consultant for input and advice. We have a great cross-section of experience and knowledge on our team. We are at your service as your business partner.
5. Not all bonds are created equal.
Not infrequently, an Owner will specify the use of a particular wording for a surety bond. In some instances, the wording can contain onerous provisions or be so subjective that it could create serious delays or problems when adjusting a claim. The use of such bond wordings should be treated with the same duty of care as the underlying contract a Contractor is signing.