We Got It Done Wednesday!!
Did you know that there are three main presentations of financial statements for contractors? The three types of financial statements include cash basis, income tax basis, and accrual basis. While each of these financial statements has pros and cons, certain types can heavily impact a company’s bonding. Cash basis primarily reflects cash, equipment, long-term debt, and equity. This is one of the most misleading presentations, as the balance sheet and income statement do not reflect the true financial health of a company. Income tax basis reflects the financial health of a company based on the company’s income tax return. Typically, the net income is understated, which is not a true reflection of the company’s profitability. Accrual financials with percentage completion reflects the true financial picture of the company while also allowing the company to maximize their bonding program. Our team has the knowledge, experience, and education to provide counsel to clients when it comes to how their financial statements are impacting their bonding. This week we are going to look at how our President, Jack Anderson, was able to provide counsel to a contractor, which majorly impacted their bonding ability.
Jack received a call regarding an affordable housing contractor that needed a $15 Million dollar bond for a new affordable housing unit. While the company did have CPA reviewed financials completed, they were not done by a CPA that specialized in construction. Jack was able to point out the deficiencies of their CPA financials, which was causing the financials to not reflect an accurate picture of their financial health, an understatement of equity. With Jack’s education and advise, the contractor agreed to utilize a CPA specializing in construction to complete their year end CPA review. After the CPA review was completed by a CPA specializing in construction, Jack was able to get them approved for $58 Million dollars in performance and payments bonds for the following year.
Here at Goldleaf, our team takes the time to sit down with our clients to learn about their bonding needs now and in the future, so we can provide them with the counsel and education to help them reach their long-term bonding goals. Help me take a minute to celebrate Jack for helping this client expand their bonding program and continue to grow. Follow along next week to learn more about what our Account Manager, Cal Anderson, was able to get done.