The Truth About Funds Administration ft. Nolen Tuttle of Upside Guarantee

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ℹ ABOUT THIS EPISODE

Funds administration doesn't have to be a cash flow nightmare — it can actually protect your business. 

Wade and Stephen sit down with Nolen Tuttle of Upside Guarantee and the Tennessee Surety Association to break down exactly how funds administration works, why sureties require it, and how it can help you get bonded, manage cash flow, and scale your construction business. 

If you've ever feared funds administration, this episode will change your mind.

⌚️ Key moments in this episode:

• 00:00 How Funds Administration Acts as a Ref for Project Money
• 00:32 Meet Nolen Tuttle
• 01:25 From Auditor to Surety
• 02:26 Launching Upside Guarantee
• 04:08 Funds Admin Explained
• 06:27 Making It Contractor Friendly
• 10:16 Benefits for All Parties
• 13:02 When Owners Get Burned
• 19:23 Data Flow and Reporting
• 20:25 Extra Services and Success Story
• 25:23 Advice for New Contractors
• 27:07 Contact and Wrap Up

The Contractor Profit Blueprint is a complete guide that breaks down exactly how to identify where your money's going and start keeping more of it. This isn't theory. It's the same framework I use with contractors I work with every single day.

Head to profitfirstconstruction.com/blueprint to download your free copy. 

Stop working for free. Let's get you keeping what you've earned.

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Find all episodes and related links at ContractorSuccessForum.com.

Join the conversation on our LinkedIn page: https://www.linkedin.com/company/CarpenterCPAs
   
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Wade Carpenter, CPA, CGMA | CarpenterCPAs.com
Stephen Brown, Bonding Expert | SuretyAnswers.com

Transcript

Wade Carpenter: [00:00:00] Every football game has referees. Nobody invites them to the post-game party, but [00:00:05] everybody expects them to keep the game fair. Construction funds administration serves as a [00:00:10] similar role on construction projects. It's an independent third party helping ensure the [00:00:15] money gets distributed according to the rules everybody agreed to before kickoff.

[00:00:20] Today, we've got a very special guest, Nolen Tuttle, who has spent years doing exactly [00:00:25] that. She's gonna help us understand why this process is becoming more common, and [00:00:30] why contractors shouldn't automatically fear it.

This is the Contractor Success Forum. I'm Wade Carpenter with [00:00:35] Carpenter Company CPAs, alongside Stephen Brown with McDaniel-Whitley Bonding & Insurance.

Nolen, [00:00:40] thank you for being here. Stephen, can you tell us about our very special guest today?

Stephen Brown: Yes, we're [00:00:45] thrilled to have Nolen as our guest today. We met because she helped spearhead and be president of [00:00:50] the Tennessee Surety Association, which is fantastic because we had been hoping someone would [00:00:55] help lead us back together again.

She brought her road show from Nashville, Nolen's in, Nashville [00:01:00] area, to West Tennessee, and we had a reunion of old friends and it's amazing. [00:01:05] We had so much fun catching up with each other.

So thank you, Nolen. Thanks for being our guest. [00:01:10] Thanks for telling us what you do.

It's just amazing your credentials [00:01:15] and your experience in the construction industry. Tell us how you got started and a little bit [00:01:20] about your company, Upside Guarantee. 

Nolen Tuttle: Yeah. Thank you. Thank y'all so much for having me. It's an honor [00:01:25] to be here. I started my career in public accounting. I was an auditor and I remember [00:01:30] graduating from school and starting public accounting, and I didn't know that [00:01:35] people would hate me, which is hilarious.

Nobody wants their auditors in the office. And so I [00:01:40] go, I start my career, I'm like ready to do accounting my whole life, right? I wanted to be an auditor forever, [00:01:45] which is, I don't know, I guess a little rare. And I learned pretty quickly that nobody wants you [00:01:50] there. And I was like, "Oh, man, that's kinda tough."

So I decided that I wanted to do something a little different. I fell [00:01:55] backwards into surety. At that time, I was working in Birmingham, and I decided [00:02:00] I wanted to move to Nashville, and I got in touch with a recruiter, and that is how I fell [00:02:05] into surety.

I'm so grateful now that I have. But as y'all know, it's such a niche industry that [00:02:10] people don't know much about unless they have a reason to find it.

So that's when [00:02:15] I started underwriting, and I did contract and commercial underwriting for several [00:02:20] years in Nashville. And I ended up making a change and doing management [00:02:25] consulting for a while.

And while I was in a management consulting [00:02:30] role, I got a call from folks that I had crossed paths with in my surety days, [00:02:35] and they were like, "Nolen, you are a CPA. You've been an underwriter. We really want [00:02:40] you to start a funds administration company so that we have access to [00:02:45] one, because we need to have one that we can trust," right?

A huge risk [00:02:50] in funds administration is you gotta trust the people in charge, for so many reasons, [00:02:55] but the obvious one is you're managing millions of dollars on behalf of other people.

[00:03:00] And so they knew that I had kind of the resume for it and the experience for it [00:03:05] and the integrity for it. And they asked me if I would be interested in doing that, and I was like, "Yeah, [00:03:10] I'll start it if y'all will use it." And it was just a perfect opportunity. I feel so [00:03:15] grateful that people trusted me enough to ask me to do this, and that's what prompted me to [00:03:20] leave consulting and dive into surety for my career and [00:03:25] launch Upside.

We started in 2024, and it's just been a [00:03:30] whirlwind. I'm so grateful. You never know how a new venture is gonna go. You just don't. We [00:03:35] entered the market and the response has been tremendous. People have been very supportive.

I think [00:03:40] people really do appreciate my background and see how my of course, accounting, but also [00:03:45] underwriting experience is so relevant and I'm able to structure these deals [00:03:50] in a way that makes the most sense for each one because of that experience, [00:03:55] and structure our approach to each project in a way that makes sense.

[00:04:00] So it really targets the risk that the underwriter had in mind when they added it as a [00:04:05] condition. I'm grateful. It's been a great journey so far.

Wade Carpenter: So Nolen, if [00:04:10] you would, just to kick us off, tell our listeners what funds administration actually is? 

Nolen Tuttle: [00:04:15] Yeah, of course. It is a third-party financial monitoring service on construction [00:04:20] projects for the purpose of reducing risk. The real core mechanic [00:04:25] around funds administration is the controlled disbursement account.

So [00:04:30] we open a bank account on behalf of the contractor on a construction [00:04:35] project. The account is in their name and their tax ID, so they own the funds in it, [00:04:40] but we are the only ones that have access to it. So we administer the funds on that [00:04:45] project for the purpose of ensuring that those funds are used on the [00:04:50] project itself and not on a different project and in a certain [00:04:55] order of priority.

So we're always going to pay vendors first, the [00:05:00] subcontractors, suppliers, anyone with a payment claim to make sure that they're paid [00:05:05] currently and correctly, right? To mitigate the surety bond risk, the [00:05:10] payment risk.

And then we will calculate the overhead and of course, reimburse [00:05:15] our client for their labor and any direct costs that they've incurred on the project, and [00:05:20] then we'll calculate their overhead and profit that they've earned based on a percentage of [00:05:25] completion calculation.

So that is the core mechanic behind it. And of [00:05:30] course, at the same time, we are monitoring their project budget.

We're asking for their [00:05:35] job cost breakdown, and we're calculating each draw against that breakdown and seeing how they're [00:05:40] tracking.

Is the job cost breakdown accurate? Are we looking like we're burning cash a little [00:05:45] faster than we thought? Is their profit margin sustaining or is it [00:05:50] shrinking a little bit? What are the risks on this, and how is it tracking [00:05:55] against what we thought would happen at the beginning of the project? So that we can highlight some [00:06:00] risks in real time for the surety.

We give monthly reports that are quite [00:06:05] thorough. We probably give underwriters more than they wanna see.

I laugh all the time, like we send them these very [00:06:10] detailed emails, I hope that they read them. I'm sure that they do. But it's a lot of information and the goal for [00:06:15] us is just transparency.

The benefit is to have us on the project in [00:06:20] partnership with the contractor, monitoring these things and making sure that the surety [00:06:25] knows at any given time how the project's going.

Wade Carpenter: So what is the reality for a [00:06:30] contractor? I know I've had some experiences in the past with some funds [00:06:35] company that are really bad about getting the funds out. A lot of times [00:06:40] contractors think it's a horrible death sentence because they're chasing their cash and a [00:06:45] lot of times they don't have really good job records.

That's a two-way street I've seen [00:06:50] where, sometimes the data is coming into the contractor and then we gotta get it to the funds [00:06:55] company. But it's a two-way street. I was really intrigued to hear how you work. So tell [00:07:00] us about how you work with contractors and how you smooth that process out. 

Nolen Tuttle: Yeah, [00:07:05] absolutely. We find communication and partnership to be the two most important things. [00:07:10] When we are dealing with contractors, we want to tell them in advance what we'll need to [00:07:15] see in order to make payments so that they have a clear checklist. And [00:07:20] early in the project we'll also just get an understanding of their operation. What does it look like when [00:07:25] we're not involved, right?

I would say Upside is more of a boutique funds [00:07:30] administration offering in the sense that we have the guardrails up on every project, but [00:07:35] the way that we apply those might be different for different contractors because our [00:07:40] goal is to hear how they operate and for us to assimilate into that as [00:07:45] much as we can.

If there are things that we can change about the way that we [00:07:50] partner with them that make things easier for them, whether it be taking information in the [00:07:55] format that they have it and not requiring them to do a certain form that we [00:08:00] have.

Of course, we have a draw request form. It's online. They can use that. [00:08:05] It's preferred. It's easy for them to complete, where they tell us [00:08:10] what subs and suppliers had costs during that month and send us the [00:08:15] documentation for those costs and their preferred payment method and things like that.

[00:08:20] But if they have the information in a different template, if they already have all of that in an Excel that they [00:08:25] like to use, we're not gonna make them redo it, right? Our whole goal is [00:08:30] to assimilate into their operation as much as we can and make them feel like they're [00:08:35] being supported and not policed.

Of course, we're gonna have the guardrails up. Those [00:08:40] don't change. But if there's a way for us to really feel like a partner to them, then [00:08:45] we're gonna do it that way because that's the most important to us. As long as we're [00:08:50] making sure that we have the controls in place, let's work together. And [00:08:55] so I would say, that's really important.

And then two, efficiency. We turn draw [00:09:00] requests around in twenty-four hours, and so we are very quick to when [00:09:05] they submit it, we get notified. We're on to our team is on top of it. We're quick to let them [00:09:10] know if there's any documentation missing so that they can go ahead and get started on obtaining that [00:09:15] information.

We'll help them with the lien waiver process if that's not something that [00:09:20] they're used to doing. We can draft all the lien waivers for them and create e-signature [00:09:25] links and really try to take as much of the administrative burden off of them.

Of course, we're an [00:09:30] added step in their normal process. We can't change that. Maybe there's things that we can take off their [00:09:35] plate that make us feel like more of an administrative support, too.

The partnership, the [00:09:40] communication, and the efficiency, the quick turnaround that we have really builds trust with them, and [00:09:45] they see us as, "Hey, they're really trying to help us. They're not trying to block our cash flow," right? That [00:09:50] would be very counterintuitive. We are not gonna take a week to turn around their [00:09:55] cash because yeah, that's not fair, and it's not helpful, and it doesn't mitigate the risk that we were [00:10:00] put in place to mitigate.

Stephen Brown: And how you do it is great for our listeners to [00:10:05] know. This is a people business, and we're dealing with people. And [00:10:10] contractors and their money, it's a very emotional thing. I get it. It is with any business, [00:10:15] in any business.

From my perspective, when I think about all the different options [00:10:20] for funds administration to help smooth a project deal, putting it together in [00:10:25] the first place, especially with private owners, especially in a job where there's a [00:10:30] lot of materials to be purchased up front, and that's gonna take a big hit on your [00:10:35] cash flow.

From an owner's standpoint, from a lender's standpoint from the [00:10:40] contractor's standpoint, and from the surety standpoint. I can speak from a surety standpoint, [00:10:45] we write performance and payment bonds. If we know the payments are being made, that takes a big [00:10:50] chunk out of the underwriting exposure.

And a lot of times, especially [00:10:55] on a job that the underwriter's worried about the cash flow situation funds [00:11:00] administration is the answer to getting it approved instead of denied.

Would you tell us a little [00:11:05] bit about the owners, the lenders, the contractors, how funds [00:11:10] administration can help them? 

Nolen Tuttle: Yes. So from a contractor perspective, [00:11:15] you nailed it. We really help them think through cash flow, and we can build out a [00:11:20] cash flow model for them for their project. And I think it's not native [00:11:25] for contractors to think through a cash flow perspective. They're just, I don't think, used to it.

Nobody should [00:11:30] hand me a hammer and go ask me to build a building, I can't expect a contractor to be an [00:11:35] expert in cash flow unless we educate them. And so we really consider our jobs to be [00:11:40] educators. We help them understand the cash flow needs of the [00:11:45] project at any given time.

I think one of the hardest things for contractors to understand is that [00:11:50] you can have a profitable project and still a cash flow problem. A cash [00:11:55] flow is at a point in time, the whole purpose is to make sure that you have the cash flow that you need [00:12:00] to get to project completion so that it is profitable.

If you can't get to [00:12:05] project completion because you don't have the cash flow to meet the immediate needs, you're gonna have an issue. [00:12:10] So from a contractor's perspective, we hope to educate them and give [00:12:15] them the tools that they need for the current project, and we hope to graduate them out of us, [00:12:20] right? We hope that they get to a place where they build trust with a surety, and they [00:12:25] have the tools and the education to know how to structure their contracts going forward, right?

So that they [00:12:30] can meet the cash flow needs, and they know how to manage that, and they don't need funds administration [00:12:35] forever.

From a lender's perspective, gosh, lenders are so [00:12:40] interesting to me because legacy lenders only use on-site inspections [00:12:45] as a risk mitigating tool. They really don't monitor the payment flow [00:12:50] downstream.

I would say some owners are the same way. They really rely on inspections to [00:12:55] make sure the work has been completed, but they don't know, they don't have the [00:13:00] transparency of the funds flow downstream. So

I'll give you an example. We were brought in on a [00:13:05] project by a developer this year, and unfortunately, we were brought in when it [00:13:10] was a little too late and some damage had been done, and we were mitigating the rest of the project risk.

[00:13:15] But they are a retail franchise owner, and they were building a new [00:13:20] location for their franchise, and they were using a great GC they'd heard great things [00:13:25] about. There were no concerns. They looked like they had it all together.

They were sending somebody [00:13:30] out there once a month to make sure the job was getting done, and they had paid them through an [00:13:35] AIA contract four months, I believe four hundred and fifty thousand [00:13:40] dollars to the GC And all of a sudden they start hearing that none of the subs or suppliers [00:13:45] have been paid.

And they were genuinely confused "Wait, how does this happen? We sent the money to [00:13:50] you, to the GC. what happened?" And they just weren't aware of the [00:13:55] risk of hey, we don't have insight into where that money went. what was [00:14:00] really hard is the GC didn't even mean to do anything wrong.

They were growing too fast. They did [00:14:05] not have a sophisticated back office, and were not tracking the funds by project. [00:14:10] And all of a sudden, they went to work one day and they don't have any cash. They couldn't [00:14:15] tell the owner where it went. They really couldn't. They were like, "We're just out of cash."

And [00:14:20] so thankfully, we got put in touch with them and we audited the whole project, essentially. Who [00:14:25] did work on this project? What are the outstanding invoices? Who needs to be paid? And of course, put [00:14:30] together the cost of complete. And it was not a bonded project. And going forward, [00:14:35] we've now become a part of their ongoing operations for every location.

Stephen Brown: This is [00:14:40] exactly what our listeners, like to hear. Also, the role of an architect [00:14:45] in seeing that the work is done according to the specs and the [00:14:50] quality. Is it up to speed?

The money being there to pay the [00:14:55] contractor. On private jobs specifically, I can't tell you how many times I've told [00:15:00] one of my customers, "Get a letter from the bank that the funding's been set aside to pay you for this [00:15:05] project."

And they're like, "Oh, no, You don't understand. This is a big developer," and you're like "No, get the letter." [00:15:10] And in one situation, they weren't getting paid and they used that letter to the bank [00:15:15] saying, "Hey, you said the funds were there to pay. I've done the work."

And the bank ended up [00:15:20] paying and they went back. The bank was on the project anyway they had to see the job [00:15:25] finished. I think it'd be interesting if our listeners could hear a little bit maybe [00:15:30] about how that helps the whole construction process, not just the cash flow, [00:15:35] which it seems counterintuitive that funds administration would slow down cash flow, [00:15:40] not speed it up.

If there's no cash flow, there's no slowing it down or [00:15:45] speeding it up. That's the point, I was hoping folks could get.

Nolen Tuttle: Absolutely. I [00:15:50] tell people we can only control the cash that we have access to we only know when it [00:15:55] hits the escrow account, that's when we can prioritize it and use it. But if you're not [00:16:00] getting the funds from the owner, that's a whole nother risk to mitigate.

And you're right, [00:16:05] it is so important to validate that the funding is there and set aside and reserved [00:16:10] so that you have access to those documents if there's a slowdown because that's really the [00:16:15] avenue that you'll need to pursue to get paid.

Stephen Brown: Yeah, I was impressed that one of your [00:16:20] designations known as a Project Management Professional. You went the nth degree to try to [00:16:25] understand what it's like being a contractor.

Maybe our listeners don't know that [00:16:30] because a lot of times Wade and I explain to our listeners we can help you with your business and your finance and your [00:16:35] bonds and your insurance and your risk management but we can't do what you're doing. We [00:16:40] cannot build what you're building.

Nolen Tuttle: Yeah, it was something that was important in my consulting [00:16:45] role, to learn how to manage multiple projects at once, and all of the moving [00:16:50] parts of them.

It was actually quite a process, but it's come in hand. I mean, it... I tell people [00:16:55] all the time, if they need a project manager, they could really just hire a mom because [00:17:00] or a parent, I guess, a a mom or a dad, right?

That's just juggling a million things because it comes so [00:17:05] naturally because you've learned how to do it. But you do have to learn how to manage [00:17:10] multiple competing priorities, and that's really the key. And I do feel like I can [00:17:15] relate to some of these project managers and contractors. I know they have, if they were just [00:17:20] focused on our project, then there might not be a problem, but they have five going on at once, and we [00:17:25] know that.

And so if we can support them as much as we can on the one project or two projects that we're [00:17:30] involved on, take something off their plate, and know that when we educate them on those one or two [00:17:35] projects, they're gonna extrapolate that to their whole approach, hopefully.

And we [00:17:40] can really help these contractors scale because they have to understand how to manage all of those [00:17:45] things in order to scale effectively.

So I am a little bit of an education junkie too. I [00:17:50] always am after like the next thing, and I've had to slow myself down a little bit sometimes and be [00:17:55] like, "Hey, this is enough." But 

Stephen Brown: Oh, yes. Hey, welcome Nolen to Wade Carpenter here. You two are[00:18:00] 

Nolen Tuttle: Yeah, I saw

Stephen Brown: spirits

Nolen Tuttle: I saw that, Wade.

Wade Carpenter: Yeah. [00:18:05] I'm really glad you're talking about all the cash flow aspects of it from the contractor's [00:18:10] perspective, because I remember years ago we had one that was in funds [00:18:15] administration and, they were used to billing by the month, but they were burning off [00:18:20] hundreds of thousands of dollars in labor every week, and they couldn't cash flow it.

so I actually [00:18:25] ended up speaking with the funds administration company and it's like, "Can we at least bill our [00:18:30] labor every week?" And they were great about it. We proved the payroll and [00:18:35] it went to the project, and they kept that funds going.

Otherwise, that contractor [00:18:40] couldn't have done it. I really appreciate what you were saying earlier about understanding and [00:18:45] negotiating, how can we get this project to work from the contractor's standpoint? 

Nolen Tuttle: Yeah, [00:18:50] absolutely. like I said, communication is key, and that's why we don't limit the number of draws per month. [00:18:55] There are others that do, and we've chosen not to because that just sends the wrong [00:19:00] message to the contractor. Like these are your funds. They are yours, and we want you to know that you can [00:19:05] use them in these approved ways on your project, right?

And if you need to draw four [00:19:10] times a month for payroll, because you pay people weekly, we wanna partner with you in that [00:19:15] and support you in that and make sure that we have, of course, the documentation that we need, but you have the [00:19:20] cash flow that you need to make it work. So I think that's really important.

Wade Carpenter: And I guess my [00:19:25] CPA had... what we do is working with contractors on the back end and, back [00:19:30] office services. One of the problems I sometimes have is, okay the draw comes in, but [00:19:35] the cash went straight to the funds administration. So the bookkeeping people, whoever [00:19:40] it is they don't...

You're smiling. I can tell you know where I'm going with this. Getting [00:19:45] that flow of data both ways, that's what I was talking about a little while ago, so 

Nolen Tuttle: Yeah, that's really [00:19:50] important. Of course, we monitor our accounts daily, and we will send contractors an [00:19:55] email that shows them what came into their account. And then every time we do a draw, they'll [00:20:00] get a transactions report that shows everything that's come in, everything that's gone out for the [00:20:05] life of the project, so that they have a full picture of exactly where [00:20:10] things are and a reconciliation at the bottom of what the current balance [00:20:15] is and things like that.

So we think that access to data is really important. They have to have [00:20:20] that, obviously, to put those transactions on their books and keep things flowing on their [00:20:25] end 

Stephen Brown: Nolen what other things do you think our listeners need to know about [00:20:30] funds administration in your company that they may not think about of why [00:20:35] it may be a good option and what other services you provide? I thought it was interesting [00:20:40] to read about just lenders and home builders. What a nightmare that is [00:20:45] making sure everyone's paid and that there are no liens on the project, and that the home is [00:20:50] finished whether it's a spec home or not.

Yeah

Nolen Tuttle: That's right. That's right. Yes, we do [00:20:55] residential too, which is really unique. And really we got into that honestly just [00:21:00] because it feels so important for there to be an option on the market for people who are having [00:21:05] homes built and making sure that the contractor and the home [00:21:10] builder, and the owner are on the same page on where things are.

But [00:21:15] yes, we do bid assessments to make sure if the surety wants and third [00:21:20] party assessment to make sure that the bid is appropriate. We'll do cash flow [00:21:25] modeling, like I said, on the projects, and that can be solicited by the surety or the [00:21:30] contractor, whoever wants better insight onto really the needs of the [00:21:35] working capital needs of the project.

And yes, we do the funds administration [00:21:40] service for the residential side and the commercial side [00:21:45] for developers, for owners, and for lenders.

And lenders, we [00:21:50] actually will do inspections as well, and we integrate inspections in a unique way on our [00:21:55] projects. We don't think that they're always necessary to be performed by us because [00:22:00] oftentimes, and hopefully they're already being performed by the owner before the funds are [00:22:05] remitted to us, before the pay app is approved.

So if we feel confident that's happening and that the [00:22:10] performance side is mitigated by the time we get the funds, then that's great. [00:22:15] And then sometimes we'll just develop an inspection plan at the beginning of the project what do we [00:22:20] want this to look like from our end? Do we wanna send somebody out twice on the project just to get boots on [00:22:25] the ground from our perspective and share that with the stakeholders?

So we'll do [00:22:30] inspections on projects that we're engaged on for funds administration or not, just to support [00:22:35] our surety partners. Maybe they didn't think funds administration was necessary and something happened on the [00:22:40] project and they're like, "Hey, we just need somebody to get out there and let us know what's going on." They can [00:22:45] partner with us and get somebody out there.

But from a contractor perspective I [00:22:50] think just knowing that we're a partner for them, that we're there, yes, to make sure that the [00:22:55] surety's comfortable or the owner's comfortable and sees what's going on, but we really [00:23:00] are there to hopefully make their lives as easy as we can [00:23:05] and provide those guardrails.

Like I have this one... I always smile thinking about this one account [00:23:10] that I have. There was a lady, she was a controller, and she was so against the idea of funds [00:23:15] administration because she said, "This is our cash." What do you mean you're gonna hold this cash and [00:23:20] you're gonna control it? And the whole idea of it felt a bit violating to her, I think.

[00:23:25] And she fought it so hard. I remember talking to the surety underwriter like, "Do we even do this?" It's tough to [00:23:30] start a project that way, and should we even, you know, try this? And so we just [00:23:35] decided, okay, let's do it. Let's try this one.

And she will not take it off of her [00:23:40] projects. It's not a requirement anymore for her, and yet she wants it on her [00:23:45] projects because she knows our team.

We feel like an extension of her [00:23:50] now, and we're taking some things off her plate, and we're keeping those guardrails up, and she's [00:23:55] managing a ton of different projects, and she knows the ones that we're on are gonna be, down [00:24:00] a straight path and we're keeping her just informed of what's going on, and it's a [00:24:05] support for her.

So that's one of my favorite success stories because it can be a [00:24:10] shock to learn that funds administration is required. I understand the initial "Wait, they [00:24:15] don't trust us?" Or, "Somebody else is gonna hold all of this, all these funds that [00:24:20] we've earned," I do understand that. And also sometimes it's just nice to [00:24:25] remember that it's not personal.

It feels personal to contractors when it's added as a condition, and [00:24:30] I, running a business myself, everything upside related feels personal to me. So [00:24:35] I don't judge contractors for that. But if you can remove the personal feelings a little bit and just [00:24:40] think of it through the eyes of a surety, they just wanted some monitoring.

If they don't [00:24:45] have somebody like us on a project, they have no idea how it's going. And so if they can just [00:24:50] get some monthly reports, they're not saying that they don't believe this contractor can't do the [00:24:55] work. If they didn't think the contractor could do the work, they wouldn't bond to the project.

They just [00:25:00] wouldn't, right? So there's a certain level of trust involved to even get to a yes, [00:25:05] and if they need to add this contingency to get there it's really not a personal [00:25:10] reflection of the contractor as much as it is just a little bit of added assurance. So that's what I would [00:25:15] want contractors to remember. 

Stephen Brown: That's great, Nolen. I think you've hit the nail on the head. I [00:25:20] want this in place. It's a good thing. It's not a bad thing.

Wade Carpenter: I know I've had [00:25:25] contractors that can't necessarily get bonded or they don't have any kind of [00:25:30] path to them. To wrap us up, what would you say to those contractors that maybe they're just getting [00:25:35] started, maybe they don't have the backing or the bonding capacity. How would you approach [00:25:40] that? 

Nolen Tuttle: I would tell them to hire you, Wade. I would tell them to get ... I mean, truly [00:25:45] make sure that they have construction experts behind their books, right? That [00:25:50] know bonding like y'all do, that would help them structure [00:25:55] their financials appropriately to be ready for their first [00:26:00] bond. I think that is really important, right?

If they weren't structuring their financials in a way that [00:26:05] an underwriter will see potential there, it's gonna be really tough. But from our [00:26:10] perspective, if there is a contractor that is new to bonding and really wasn't prepared for it, [00:26:15] funds administration is a great solution as a tag-on to the bond [00:26:20] approval to help just kick off that relationship with the surety and say, "Hey, it's not [00:26:25] that we don't think you can do it." It's that we just want you to have support. We want you to have [00:26:30] support on this, these first few projects that are bonded and support that knows bonding, [00:26:35] right? Support that understands surety and can align all parties on [00:26:40] one page for one purpose. I think that's so important.

So I think just ask, [00:26:45] telling the contractor to be open to unique structures like funds administration, [00:26:50] letting them know there might be a working capital seed requirement, right?

To make sure that [00:26:55] funds are put in the escrow account, the project can be cash flowed and build up [00:27:00] their back, bonded backlog so that the surety does establish that relationship and build [00:27:05] trust to support larger projects for them.

Wade Carpenter: All right. Well we again appreciate you [00:27:10] being here. How can our listeners contact you?

Nolen Tuttle: I would love for them to reach out. We love to talk [00:27:15] to contractors. Yes, you can reach out through our website, [00:27:20] upsideguarantee.com, or you can email me directly. It's Nolen, [00:27:25] N-O-L-E-N, @upsideguarantee.com, and I would [00:27:30] love to hear from you. And I'm on LinkedIn too, so I know contractors aren't usually, but if anybody [00:27:35] listening to this podcast is on LinkedIn, feel free to message me.

There are several ways to reach me, and [00:27:40] y'all can share my contact information, and I'd love to chat with people.

Stephen Brown: Thanks, Nolen. We just hit the [00:27:45] tip of the iceberg in understanding everything you do, and how you help [00:27:50] contractors and owners and lenders and everyone get the job done. Get it built, [00:27:55] get it finished, get everybody paid move on to the next one, and help everybody along [00:28:00] the way.

So thanks so much for being our guest today. 

Nolen Tuttle: Thank y'all so much. This was [00:28:05] great. I appreciate y'all. It's an honor to be here, and hope you have a great day. 

Wade Carpenter: Okay. Yeah, [00:28:10] we will put her contact information in the show notes below. If you're hanging out with us [00:28:15] we do this every single week. We'd appreciate it if you'd like, share, or subscribe, do all that stuff. It really helps [00:28:20] us out and helps us get great guests like Nolen to visit us every now and then.

[00:28:25] We appreciate you being here. We will see you on the next show.