How to Get a Payment Guarantee
Do you require an Advance Payment Guarantee to get Advance Payments from your counter parties? Follow the steps given below to apply a Guarantee Letter from rated banks without blocking cash funds!
- The seller or contractor submits their deal in terms of SPA or a contract.
- And then, we will review the contract & will inform them whether their request is approved or not.
- Next, if approved, we will sign the service agreement with our client. Also, we will inform them to pay the admin charges to begin work on their deal.
- Once they pay the charges, we will work with our bank to structure the MT760 by blocking our bank limit. And then, will send the Bond draft for the client’s review; also, will inform them about the required issuance fee.
- Finally, we will request our bank to proceed with the APG issuance from our bank account. And, our bank will issue the Advance Payment Guarantee to the counter party’s bank via MT760 SWIFT within 48 hrs.
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Down Payment Guarantee Video
Bank Guarantee Issued for a Client in UAE
A UAE Contractor has a requirement of Advance Payment Bond worth $670,925 to get advance payments from their developer. The client requested BWT for assistance and we arranged our Trade Finance Facility by blocking our bank limit & facilitated the required Bond from our bank account.
What is an Advance Payment Guarantee?
Advance Payment Guarantees are a written undertaking issued by banks in favor of buyers or project owners; upon the request of contractors or sellers. Further, this Bank Guarantee acts as a surety to secure the upfront payment made by the project owner or buyer; against any default by the contractor or seller.
APG MT760 is mostly used on construction projects; whereas contractors require upfront payments to mobilize the project. And, if a client agrees to make an Advance Payments, then they will demand a Payment Guarantee from the contractor to secure their payment. For instance; if the contractor defaults or fails to complete the work; then, this bond will protect their client from fiscal risk.
On the other hand, this Payment Bond can also be used in import / export trade deals. Wherein, the buyer demands the seller to provide this bond. In case, if the seller requires some cash in advance from the buyer before the supply of goods. This is to assure the buyer that in case of non supply of goods by the seller, the buyer can claim the bond to get their payments.
In the bottom line, Payment Bonds protects buyers or project owners; rights from any fiscal risks; also to make they do not lose their cash paid in advance because of client’s default. But on other hand, it does not cover any loss or profit; which the buyer or project owner may expect after the completion of tasks from the parties.
Advance Payment Guarantee in Construction
Payment Guarantees play an important role in the construction industry. When a project owner signs a building project with the contractor, the contractor requires advance payments from the project owner to start the work on the project. In this case, to secure the advance payments made to the contractor; the project owner demands a Bank Guarantee from the contractor in their favor.
Further, once the bond is received, the project owner provides the required payments to the contractor; to execute the work on the project. On the other hand, with the issued bond, the project owner gets assurance that the contractor will complete the project as per the agreed contract; without any default. Also, these advance payments will be adjusted from their monthly recurring bills. It also assures that in case of any default in completing the project; the project owner can claim the bond to get the advance payments refunded from the contractor’s bank.
Payment and Performance Bond
Like construction, Bank Guarantees are also being used in imports and exports. When a seller asks the buyer to provide cash in advance to mobilize the trade; the buyer demands the seller to provide Payment Bonds that secure the advance from any default against the seller. The amount of the bond mostly depends on the advance payments paid. Also, the bond normally expires; when the supply of goods has been done.
In case, if there is any default in the performance of the seller; then the buyer can call the bond to claim the refund. To get the guarantee, the seller contacts their bank with their MT760 request. And for this, the banks will ask the seller to provide 100% of the bond value as a margin amount. Also, the bank will start the work on the BG request; only if you fall within the T&Cs of the bank.
But we at Bronze Wing Trading assist traders to get the Payment bonds without blocking their cash funds as margin amount. Moreover, our issuance process is simple & quick; which allows sellers to get the bond issued within 2 days. Whatever your requirements are, we can help you every step of the way and provide you with the Guarantee Letter at nominal charges.
Advance Bank Guarantee Benefits
Meanwhile, there are a lot of reasons to avail Bank Guarantee from us. However, here we have listed the top benefits of getting APG from us.
- Expand your business as your cash is in your control.
- Moreover, it helps contractors to sign worthy contracts.
- It allows the buyer to void the deal; in case, if the seller fails to perform. Also, it confirms the buyer’s right to claim the payment paid.
- Also, suitable for building projects, buying bulk goods, and large scale plants.
Advance Payment Bond Cost
The cost of this Payment bond includes processing fee, bank commission fee, transmission fee, and swift charges. Also, the fees may vary based on the value.
Moreover, the charges are to be paid prior to its issuance; by the contractor to the bank as per the agreed terms.
International Bank Guarantee Providers
Have you secured a building project or supply contract; but do you require advance payments to start the work on the project or trade deal?
Is your project owner demands you to provide a Payment Bond to provide advance payments?
Would you like to avail the required bond without blocking your cash funds?
We’re just a call away! We, the International Bank Guarantee Providers in Dubai support contractors and suppliers; by providing different types of Bank Guarantees from rated Banks within 2 days; i.e., in just 48 banking hrs.