What are the Benefits of Bonds?
There are several benefits of bonds that occur in the real world. Although we probably cannot go through all of them, let's discuss several of the biggest benefits of bonds that we see our clients receive after they become bonded.
First, there is a significant reputational benefit to a bond. When a company becomes bonded, it tells clients and potential clients that the company is financially stable and is (or would be) a good partner for a job. If you think about it, the bond is a significant signal to the market that the company can be backed by a significant financial guarantee, if needed.
Second, there is a significant ability to open up the number of jobs that can be bid upon. Once a company gets a performance and payment bond, they can then go out and bid on more jobs. Further, the jobs that require bonds do not have the same level of competition that non-bonded jobs have. So, the profit margins can be increased for those jobs, as well as there being a significantly more bountiful contracts to be had.
Finally, the company can see an increase in margins. This is because the company is able to sell itself as a stable company with financial power that uses its expertise and reputation instead of just being a low bidder. Thus, the company can become a reputation-based bidder, which can increase margins.