The construction industry can be extremely competitive. Contractors and construction companies understand that the ability to increase surety capacity is always a good thing. This can allow construction companies to take on bigger projects, gain new clients and obtain a competitive advantage. One way for your clients to increase their surety capacity is to use a Certified Public Accountant (CPA) that specializes in construction accounting.
How Exactly Can a Construction CPA Help?
One of the most important factors surety companies consider is the financial health of the construction company. Although the construction company may have an internal department to handle its accounting needs, the accounting methods used and how the information is presented can make a difference to sureties. Therefore, using a construction CPA can be advantageous for several reasons.
- Construction CPAs know not only how to provide financial information in a manner that is widely accepted and recognized (in accordance with General Accepted Accounting Principles), but know how the construction company works, and therefore provide the information most beneficial to contractors. For example, an accounting rule that works best for a clothing store may not be as beneficial for a construction company.
- Sureties expect a year-end fiscal report 90-120 days after the end of the fiscal year. A construction CPA understands this and will make sure timely financial information is provided to the surety company.
- Because a construction CPA will have a better understanding of how the construction industry works, she or he will be better able to effectively manage cash flow. A construction CPA can help with decisions such how to refinance old equipment or choosing whether to rent or buy.
- The IRS tax code has a special section just for construction companies. A construction CPA is going to be experienced and well versed in this area and as a result, be able to provide more effective tax advice which will improve the contractor’s financial position.
- A construction CPA will be aware of industry trends that affect the construction industry, whether it be changes in the tax code, new federal regulations or amended state laws.
- A CPA that it is familiar with the construction industry is more likely to be trusted by a surety company.
- A construction CPA will be more familiar with the accounting and project management software used by the construction company, which will help in preparing financial information. Inversely, the construction CPA can recommend different software, which may allow for more efficient internal accounting practices.
The above listed reasons can be shared with your clients to help them plan for increased surety capacity in 2019. For more information or questions about construction surety, please contact Allstar Financial Group at 800-424-0132 or visit our website at AllstarSuretyBonds.com.