When Do Underbillings Become a Concern for Bonding Companies?

An underbilling can be caused by something as simple as missing a billing cycle or as significant as an omission on a project estimate, and a lot of things in between. But underbillings can become an issue that causes your bonding company to raise a red flag.

So when does an underbilling become an issue that your bonding company will view as problematic? 

Your bonding company understands that underbillings are a part of the normal course of business operations in the contracting industry. But contractors need to keep a close eye on actual costs and billings vs. estimates as the project progresses. 

Underbillings can become an issue when they start to become a significant part of a contractor’s working capital.

Communication with your surety broker is crucial in keeping the red flags from being raised. You don’t want your bonding company to start questioning lax billing policies or the possibility of unapproved change orders and other negative factors that can cause an excessive underbilling.

Want to learn more?

Don’t miss this 60-second video from Brent Headley, Senior Surety Specialist at Anderson & Catania Surety Services, LLC.