In my last blog, I discussed several year-end planning issues that can significantly effect a company’s surety support for the upcoming year. In this blog post, I would like to finish looking at the remaining year-end planning issues which can have an effect on the kind of surety support Goldleaf can obtain for a company.
Owners should check their personal credit scores.
Individuals are now entitled to obtain a free copy of their personal credit report from the three major credit reporting agencies each year. Owners should take advantage of this as all surety companies check personal credit when underwriting for surety support.
Improve the company’s “working capital” position.
Positive working capital is a major factor in bonding.
Improve the company’s “liquidity.”
Before year-end, clean up as many of the accounts receivable as possible and convert to cash.
Obtain an increase on the company’s operating line of credit.
As a company’s revenues grow, its operating credit facilities should be growing as well.
Do not undertake ownership changes without considering the surety implications.
Depending on how they are financed, buy-outs and other ownership changes can compromise (and, in some cases, can destroy) a company’s bonding capacity. Anyone planning to stay in the company should be aware that if an ownership change in not handled properly from the surety company’s perspective, the resulting loss of bonding capacity will drastically drop the value of the surviving company.
I would also like to note that it is not only at year-end when companies may be making decisions which will impact their financial statement. During anytime of the year when decisions arise which may impact the financial statement, companies should contact Goldleaf Surety to discuss the impact of those decisions on their bonding support.