Suretec - Our Services - Funds Disbursement Services help contractors receive and pay funds for specific projects, assist with underwriting surety bond

Funds Disbursement Services - Frequently Asked Questions

Q. Will my suppliers and subcontractors know that you are processing these payments?

Not unless you tell them. Other than the signatures on the checks, SureTec is not identified.

Some of our accounts find that it is advantageous to advise subs or suppliers of our involvement, to achieve more favorable credit terms or avoid down payments, personal guaranties, or joint check agreements.

Q. Will my customer know that you are processing these payments?

The initial letter of directive to your customer merely mentions that you are having funds directed to us as part of your bond underwriting process. No specific mention is made of the nature of our services.

Again, some accounts find that their customers are more liberal in payment terms, more agreeable to reduce retainage, and generally more comfortable knowing that you have made arrangements to insure that the money they pay you on their job will be used on their job. That is up to you.

Q. By the time I get my money, my subs and suppliers are already impatient. Will the process slow things down?

If you have your voucher to us before the funds are received in our office, and unless there are problems in verifying collection of funds, you should have checks in hand to distribute on the fourth banking day following our receipt of funds. If your customer wires money in, we will have checks to you even sooner.

Q. What if my customer sends the funds to me by mistake?

This happens, despite their having received directions to send the funds to us. You should notify us that you have received the funds and forward them to us without depositing them in your bank.

Please counsel anyone in your company who might receive contract funds of the importance of sending those funds to us immediately.

Q. What if I don’t want to pay a subcontractor because of a dispute?

You should advise us of the dispute so that we can appropriately reserve for those costs, but it is not our intention to have you pay any vendor or subcontractor more than you owe them.

If the problem is because of second tier supplier claims, we will gladly joint check your subcontractor and its suppliers, at your request.

Q. What are the most common sources of friction in this process?

Fortunately, the process works very smoothly and problems are rare!

Some contractors are not used to accounting for materials from their own inventory or the use of their own equipment. They consider this part of their fee or home office overhead. If they do not establish cost budgets and understandings with us on these items on the front end, they may find that cash does not flow as needed.

The contractor who is used to commingling funds and paying bills on one job from funds received on another will find that this is no longer possible on the job subject to the disbursement program.

Some contractors confuse their draw schedule with the process of disbursing based on incurred costs. They may have a good deal of their profit and overhead loaded into the first draw…with plans on using some of those funds elsewhere. Billings in excess of costs will not be distributed from the disbursement account until the costs are incurred.

By far, the most frequent source of friction is the situation when our contractor procrastinates in getting us the vouchers . . . often until long after the funds to pay it have been received. By then, the vendors and subcontractors are clamoring for their money. We understand that this will happen occasionally and will work with you. But, we can’t always drop everything for the habitual offender.

All too often, the company owner will agree to this process, sign the Funds Disbursement Agreement, and forget to alert the accounting and bookkeeping personnel in his or her company how this process works. That is why we require an initial deposit.

We try to be relatively low key in our dealings with your customer. As a result, they sometimes forget about the letter of directive. When the funds are sent to our contractor and then deposited to our contractor’s account, many of the purposes of this program are thwarted. The failure to transmit those funds to us could result in a loss of bonding credit.

Q. Are there additional steps that can be taken to make the process run smoother?

If you can negotiate to have your customer wire transfer, ACH transfer, or pay by certified funds, the payment process can be greatly accelerated.
E-mail is our preferred method of communication.
Provide your vendor and subcontractor information (addresses, taxpayer ID #, contact name, etc.) in electronic format.
Provide your estimate and cost codes in electronic format.