Contractor Frequently Asked Questions: Part 3
What factors are taken into consideration when trying to obtain a bond program?
What is a general indemnity agreement (GIA)?
A general indemnity agreement is a contract between the principal and the surety. It is a legal document that guarantees that if there is a loss and the surety must pay out, the principal will make the surety whole again.
What can cause cash flow issues on my financial statement?
Standard payment procedures
Payments being made to subcontractors and suppliers prior to the principal receiving payment from the owner.
Retainage on projects
Purchasing assets with cash.
Accounts receivable are not being collected in a timely manner.
Completed projects not being closed out.
Too much inventory
What are the different income recognition methods?
There are three accounting methods, completed contract method, accrual recognition method, and cash recognition method. For more information on these methods, check out this income recognition article.
Have more questions?
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