Funds Administration - Procedures
As a condition of issuing a surety bond for the principal, Underwriting has requested
the principal’s project to be placed in funds administration.
The following procedures will provide the principal a general set of guidelines
to the funds administration process:
Upon the principal’s acceptance, the principal’s agent works with Vista to coordinate
a conference call between the parties to explain the mechanics.
The funds administration personnel will complete and forward a
"Funds Administration and Disbursement Agreement"
for the principal’s review and applicable execution.
The personnel will then direct the principal to the applicable
"Letter of Direction,"
depending on the Surety issuing the requested surety bond.
The "Letter of Direction" is to be completed on the principal's letterhead and
delivered to the project owner with whom you are contracting, requesting they
forward all project checks/proceeds made payable to the principal to Vista’s
All contract funds received will be deposited into a FDIC banking institution established
by Vista’s provider on your behalf.
All disbursement checks will include the principal’s name and address and be processed by
the provider then delivered to the principal via overnight delivery for transmittal
to the subcontractors and vendors.
The principal will submit a disbursement request for each progress billing submitted to
Funds are then disbursed from monies received for each applicable disbursement request
Only the incurred costs for the billing period, and the overhead and profit percentage
based on a cost-to-cost basis, will be disbursed.
If an under-billing exits, the principal will be responsible for either depositing the
additional monies into the escrow account or reimbursed less of their own
incurred costs for that billing period.
If an overbilling exists, the overbilled funds may remain in the account until full
assurance is made that adequate funds exist for job completion.
When there are additional funds in the account, after the project is completed and all
applicable conditions are met, the additional funds will be returned to the principal.
As a reminder, the principal should complete and submit a disbursement request package
each time they complete and submit a progress billing to the owner for payment.
The goal is to have the disbursement package prepared well in advance of receipt of funds
from the owner so that Vista can properly process the disbursement information as quickly
The principal will also receive various project status reports along with the processed
checks to provide transparency relative to the status of the funds and the project.