Finance

Understanding The Purpose Of Surety Bonds

Surety Bond

Surety Bond

A surety bond is a guarantee to pay if a party fails to meet an obligation, such as the terms of a contract. Surety bonds are used to guarantee payment in case of default. They protect against losses if a principal does not meet a certain obligation. A surety is considered to be a contract with at least three parties. These include the obligee, the principal, and the surety. The obligee is the party receiving the obligation. The principal is the party primarily responsible for performing the contract and the surety guarantees to the obligee that the contract will be met.

In Europe, a surety bond can be issued by a bank or a surety company. The bonds issued by banks are called Bank Guaranties. If they bond is issued by a surety company they are called surety bonds. These bonds pay cash up to the limit of the guaranty if a principal defaults on their obligations. A principal can pay a fee, usually paid annually, which allows them to purchase surety credit.

If there is a claim, the surety company will conduct an investigation. If the claim is valid, the surety company pays and then gets reimbursed for the amount of the claim and any legal fees.
The solvency of the underwriter of a surety bond is usually verified by governmental regulation, a private audit or even both.

One of the primary elements of a surety bond is the penal sum. This is the maximum amount of money that a surety will pay if a principal defaults. This sum is determined by how risky a surety considers a contract and a fee is charged depending upon the amount of risk.

Other situations can also call for a surety bond. They are often procured to guarantee the performance of certain fiduciary duties performed by people in public trust or private positions.

In the United States, surety bond premiums exceed $3.5 billion annually. Corporate surety activities are regulated by state insurance commissioners who regulate and license agents and brokers who sell the bonds within their jurisdictions.

The construction industry uses contract bonds to provide surety to the owner of a construction project. They guarantee that the general contractor will meet all contract requirements. Construction contract bonds are a type of surety bond but are different than a contractor’s license bond which may be required for a contractor to be licensed. Bid bonds are another type of contractor surety bond and are used to guarantee a general contractor will take the contract if they win the bid. A performance bond guarantees that the general contractor will perform the work per the contract terms, and payment bonds guarantee that the contractor will pay their subcontractors and for any materials ordered. These contracts are often used in federal projects since it is not possible to get a mechanic’s lien for these projects. Maintenance bonds are used to guarantee a contractor will perform repairs and upkeep for a facility for a specified length of time.

A surety bond is an important mechanism for ensuring the performance of certain contracts. The type of bond will depend upon the details and terms of the contract being guaranteed.

10 Mar 2016

Looking Into EB5 Investment

investmentI will be looking into EB5 investment. I would like to see if it is something that will work well for us. I am just not sure it is what we are looking for but I think if I can do some research on the matter we should be able to figure it out. I enjoy doing research so it shouldn’t be a problem to find time to do it.

When it comes to money, I have always been more of a saver then spender. I buy things for myself every once in a while. I feel a little guilty when I do so it doesn’t happen very often. I have always been that way and I think it has helped me build up a good savings over the years as well as not having too much debt.

There is a lot I want to do in the future. I really want to retire early and not have to work until I am too old. In order to do that I have to work on my savings and investment plans. That is why I am really curious about EB5 investment and want to see if it is what will help me achieve my dreams.

Right now I work full-time for a company I have been with for about five years. I think I could work my way up the ladder which would be a good way to make more money. I plan to work hard and see how far I can go.

I also plan to save more and pay off my house early. I bought one last year and I am already on my way to paying it off. I think it helps that I don’t spend a lot on extras. I keep life simple so that I can have the life I want later on in life.

My parents didn’t live this way at all. They just bought what they wanted all of the time and told themselves they would pay for it later. They ended up running into a lot of issues when my Dad lost his job. I never wanted to be like that so I have tried hard to not ever be in that position.

I think investing would be best because it would allow me to save even more money while I am just working my job and living my life. I won’t really have to make any extra effort with it. I just need to figure out how to set it up and what I will need to do to keep it going.

There seems to be a lot of investment opportunities out there for me to choose from. I am going to take my time to figure out the right one for me. I want whatever investment I go with to be the one that will make me money and allow me to get close to my dreams. I am hoping the EB5 is the one to be able to do that for me.

16 Sep 2015

Accounts Receivable Financing Ensures a Constant Cash Flow

business dealA business is in constant need of some form of financing to ensure that its operations are never halted, because of a shortage of money. The finance is required for the buying of raw material, paying salaries, paying for utilities, administrative costs, and financial costs and to extend credit to their customers, in order to facilitate business.

One type of financing that is used by companies, uses their assets which have built up as a result of their supply of manufactured products or services, and which the customer has not yet paid for. This is called accounts receivable financing and is money owed to the business that functions as collateral. The lender will agree to provide an amount that is lesser than the total value of the goods billed to customers. This form of financing has been around for centuries and involves the pledging of invoices to a third party, or often their outright sale. This ensures that businesses receive cash immediately after they dispatch goods to customers, and this allows them to use it for continuing their activities, without having to wait for the proceeds of the sales.

In accounts receivable financing, a business provides the customer with their required product or service against properly documented invoices. Once the customer authenticates an invoice, the business sends this to the financing agency and in turn receives a percentage of the invoice value, normally ranging between eighty and ninety percent. In most cases, the customers will pay the invoice value directly to the financing agency, as and when it is due. Fees for this financing are decided in advance and these are deducted from the remainder value of the invoice and sent back to the business.

Businesses need to inform their customers about the financing arrangements, so that they make the payments to them, and it is necessary that they agree to such an arrangement. Financing companies have to depend on customers of the business for payments and will in most cases insist on verifying the credentials of such customers, and may even refuse financing if they are having any doubts about their credibility.

This form of financing allows businesses to use money from lenders to ensure their growth and continuing business. They however, need to be very careful to ensure the reliability of their customers, if this has to be a success. This arrangement works very well for older and well established customers who have a history of being scrupulous about making payments for goods received by them.

24 Feb 2015