Your Numbers Are Telling the Bonding Company a Story. Here's How to Understand it.

Okay.

If anybody's listening to this on the podcast, you may want to check this out on YouTube.

We've got some visuals today.

I think that might help tell the story.

But again, this is born out of about four or five different scenarios with people trying to get bonds recently and I know, Stephen, you and I had one in particular that just you can't send financials to a bonding company that you don't understand how they're going to affect you, whether you have a cash-based statement, a cruel-based statement, or trying to do your own whip.

Sometimes people are trying to manipulate things, and that's where a lot of this is coming from.

So let me just kind of kick this off.

And Stephen, hopefully you'll tell me if we're not making sense here.

But essentially, what are we trying to do with a WIP schedule, Stephen?

I think you got it here.

How far along are you in the projects? How much have you completed? How much have you built? How much is left to be done to complete the project?

Yeah, you can manipulate the things one way or another, whether you intend to or not.

If you're not collecting the cash, you're waiting on receivables or retainage.

A lot of this, the intention today is to show you how these all fit together.

So what I was wanting to do today is walk through a fictional contractor.

and start with what's happening.

I'm going to show these things a couple of different ways, but let's just say we had two contracts and I'm just for simplicity.

We're going to build on this example, but the second job, we had a million dollar job.

We estimate it's going to cost us $800,000.

We've got $400,000 in it today.

So we're exactly 50% done.

That means we've earned half of that million dollars.

And lo and behold, we built exactly $500,000.

So there is no over and under billing.

And we're basically going to be recognizing $100,000 gross profit.