In the construction industry, it can be challenging to protect your company from the many claims that can arise as part of doing business. Even the most experienced construction contractors can find themselves in a dispute, and when those disputes escalate you might be presented with a bond claim. These claims can do serious financial damage to small and mid-sized construction businesses. How can you protect your company?
5 Tips for Avoiding Bond Claims
- Before you receive a bond claim, you will probably already have an idea that the relationship is becoming strained and more hostile. Once a bond company becomes involved, you will be working with the bond company and not the agents and underwriters that you already know. Don’t be afraid to negotiate with the claimant to try to resolve things before they progress further.
- Read every contract before you enter into it. You might want to protect your company and think that you are doing so, but bond companies that guarantee the contract will use its specific terms and conditions to determine whether or not you are in default. Even if you’ve done business with the same parties before, you need to read every contract carefully.
- If you receive notice of a bond claim, make sure that you check the timing to make sure that it was filed correctly. Many bond forms require written notice of the claim in a strict window of time, and improper paperwork can lead to the entire claim being invalid. Make sure that you check the paperwork carefully to protect your company.
- Serious bond claims can be a challenge, so you should always keep excellent records. Checks, screenshots, emails, photos and other records are critical to defend your construction business, so you should ensure that you have systems in place to document everything and find the records if you need them.
- Make sure that you understand your indemnity agreement so that you understand your responsibilities and requirements before something happens. Many companies wait until it’s too late, which can leave them unprepared and not ready to fulfill their obligations.
Protect Your Company with Help from MKS&H
MKS&H provides tax and accounting services to businesses of every size and in every industry. We can work with you to determine the best way to update your records, plan for the future, budget and more. Contact us today for a consultation.
About MKS&H: McLean, Koehler, Sparks & Hammond (MKS&H) is a professional service firm with offices in Hunt Valley and Frederick. MKS&H helps owners and organizational leaders become more successful by putting complex financial data into truly meaningful context. But deeper than dollars and data, our focus is on developing an understanding of you, your culture and your business goals. This approach enables our clients to achieve their greatest potential.