When applying for a surety bond, a surety agency may ask you (the principal / the contractor) to submit certain financial documentation. The company relies on these documents to determine your financial worthiness.
A Work in Process (WIP) report is one of the most important financial documents that you will be submitting to your surety agency.
What Is A Work in Process Report?
A WIP report is a detailed report that includes information about the financial performance and status of a construction project. Surety agencies use this report to monitor the progress of a contract.
The report comprises information about a contractor’s completed as well as in-progress contracts for a certain period of time. It typically includes financial information pertaining to the project, such as the estimated cost, costs incurred to date, estimated gross profit, total billings to date, and more.
Why Is it Important?
A WIP report is a useful tool for both surety agencies and contractors. Contractors can use the report to monitor the progress of their projects. Not to mention, they can record and keep track of significant financial information about their previous and current projects. They can use this information to analyze their job performance.
Meanwhile, a surety agency checks the report to determine how risky a contractor is and if they should issue a bond to them. Most surety companies generally look out for contractors’ billing records in the WIP report. Frequent underbillings, for example, may indicate slow billing practices. Therefore, the surety agency might want to wait to see significant cash and receivables in the balance sheet. In addition to billings, surety agencies also notice a contractor’s profitability over time.
A WIP report plays an essential role in a surety’s bond approval decision. It is therefore crucial that contractors provide accurate, reliable and up-to-date information to increase their chances of getting the bond.
If you have any questions regarding WIP report or surety bonds in general, we’re here to help. At BondPro, Inc., we’re committed to assisting small and medium sized businesses compete in today’s business world.
BondPro, Inc. issue a range of surety bonds, including probate bonds, car dealer bonds, marijuana bonds, contract bonds, commercial bonds, court bonds, reclamation bonds, maintenance bonds, health club bonds, insurance broker bonds, warranty bonds, outdoor advertising bonds and more, in fifty states across the country. We have access to multiple bond markets that allow us to offer the most competitive rates to our clients.