Contractors

The Bond Exchange has bonded over $2.5 billion of construction contracts over the past decade alone. We specialize in maximizing the bonding capacity for contractors regardless of their trade or specialty and despite how big or small their bond needs might be.

What Our Clients Say....
"It is important as a public works contractor to partner with a well seasoned bond agent.   The Bond Exchange has played a key role in the success of my business for the past decade.  The level of service they provide is unmatched.  I would recommend their services any day of the week."

Ali Navi, President
AMD Construction Group

Fund Control - How it Works

The utilization of funds control, often referred to as funds disbursement or funds administration, on a construction project can be requested by a surety company under various circumstances.  In general, funds control enlists the services of a 3rd party organization to oversee, collect and disburse the monies collected on a job throughout the course of its completion.  On a general basis, each bonding company utilizes a fund control company with which they have experience or, in some occasions, the surety may have a subsidiary fund control organization.

Upon being awarded a contract which will be fund controlled, a funds disbursement service agreement is executed between the contractor and the fund control company.  This agreement sets forth the requirement that all contract proceeds will be sent directly to the fund control company and that the job costs, as well as overhead and fees, will be disbursed by the fund control company during the course of the project.  Most fund control companies require the contractor to collect a letter from the project owner, most often referred to as a “letter of directive,” as a means of assuring their understanding that all progress payments made on the project will be forwarded directly to the fund control company. 

Prior to the first progress payment being collected, the fund control company and the contractor review the project cost estimates, budgets, contract documents and the draw schedule with the project owner.  Upon payments being remitted to the fund control company, they are deposited into a specialized account.  In general, upon receiving each progress payment, the fund control company typically requests information pertaining to the checks a contractor is requesting to be paid during that pay period.  The fund control company will draft checks payable to all subcontractors, suppliers and other vendors and will forward them to the contractor for signature and disbursement.  In addition, payment to the contractor for an agreed amount of profit and overhead will be distributed, as well.     A contractor is responsible for the payment of payroll and miscellaneous operating expenses throughout the duration of the contract.  Prior to all payments made from the fund control company, they often require lien releases from all subcontractors and vendors for the prior month’s draw.  Only incurred costs for a particular billing period and the agreed overhead and profit percentages will be paid during each progress payment.  Over billings will be retained by the fund control company and payment of any shortages for under billings will be the responsibility of the contractor.

Upon completion of the project, the contractor should have already been reimbursed all costs associated with the job, as well as the profit and overhead.  Should additional funds remain in the account, they will be immediately disbursed to the contractor.

Should you have additional questions regarding funds control, its use and benefits, please feel free to contact The Bond Exchange at 800-764-7233.