Bank guarantees ensure that, your company and your business partners obtain extra security when entering into financial commitments and agreements.
Strengthens your negotiating position and is often a prerequisite to enter into a contract.
With a warranty framework, you do not have to apply for new guarantees each time you need one.
Ensures financial compensation should a contract be breached.
Terms
- An establishment fee will be charged.
- A fixed quarterly commission of the guarantee-amount is calculated.
- Commission and establishment fee depend on the size and risk of the guarantee.
How does it work?
Bank guarantee documents secure the rights of both the buyer and the seller. Payment guarantees are one of the most common types of guarantees. On issuing a payment guarantee, the bank commits to pay a supplier, should your company not be able to pay at the pre-agreed date. The company makes a settlement with the bank after the trade.
In order to obtain a bank guarantee, we issue a pledge on assets in your company.
When do you need a bank guarantee?
Demand a bank guarantee when:
- You have substantial outstanding debt with another party.
- You are a supplier and want to secure payment for your delivery.
- You trade with foreign counterparties and minor fluctuations in the exchange rate may affect the buyer's ability to pay.
Issue a bank guarantee when:
- It is a prerequisite to obtain a contract or to have goods delivered.
- The ability to provide a guarantee shows strength in negotiations.
- The guarantee can be used to obtain leverage through improved liquidity.
Most common guarantees
Payment guarantee
Payment guarantees ensure the customer's supplier payment. There are a variety of payment guarantees, but generally they cover the purchase of goods or services where the seller requires a bank guarantee.
Lien guarantee
A lien guarantee is required by law if you are in the transport business. There are various transport guarantees tailored to your needs, depending on whether you are for example a taxi driver or a freight transporter.
Rent guarantee
Rent guarantees are issued where proprietors demand a guarantee for rent payments - normally for a specific amount.
Loan guarantee
Loan guarantees ensure that the bank guarantees for all or part of a loan that the company has with another loan institution.
Contract guarantee
Contract guarantees, or contractor's guarantees are issued when a contract is entered into for the execution of an assignment where the client requires that a bank guarantee be provided for the whole or part of the amount. This form of guarantee is often used in the building and construction industry.
Other guarantees
Not found the guarantee you are looking for, or need a solution tailored to your specific needs? Contact us and we will find the best solution for your company.