Whether you're a homeowner looking to complete a small improvement project or a business owner who is engaging another party in a complex, long-term contract, it's important that you take all necessary steps to reduce your liability. While handshakes and guarantees can seem admirable, they only go so far in providing actual, tangible, financial guarantees.
Below, you'll find a guide to some of the benefits of using surety bonds. These agreements will allow the hiring party and the person being contracted to reduce any issues between them by using a third party, and if you're the party doing the hiring, you can feel more confident that you've made a prudent decision.
Cost Effectiveness
One of the most common tools used instead of a surety bond is a letter that guarantees credit. Unfortunately, this method can have several financial drawbacks that may create a significant encumbrance to your ability to maintain liquidity and comfort throughout the process.
Surety bonds don't require the generation of a credit report, which allows them to be agreed to much more quickly and with less external expense. They also don't necessarily need to be reported on all balance sheets, allowing you to continue with standard budgetary practices without worrying about making special allowances for circumstances that may be difficult to anticipate.
Dispute Management
Surety bonds came into existence because of a desire to have a neutral third party as an arbitrator as well as a provider of a guarantee. This has a significant benefit if you find yourself in a situation where a financial dispute could risk maintaining a strong and fruitful business relationship.
The introduction of that third party obligates them to be available and engaged throughout your dispute resolution process. Your trust in this third party should allow you to grant them full control over the arbitration, taking the process out of your hands and significantly reducing your stress.
Maximum Efficiency
Without the establishment of a surety bond, you may suffer from some difficulties in maintaining cash flow. These difficulties can take the form of both an interruption of that flow as well as an excess of it; without a firm bond, you may find yourself accidentally double funding a project. Relying on a surety bond, like those offered by NFP, P & C, Inc., will set up a definitive and clear source of funding, and will provide you with the peace of mind of knowing that your agreement will be successfully and professionally managed.
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