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Use Guarantees (also known as Bonds) to give new buyers confidence in your ability to make payment or perform under a contract.
Compensates the buyer/beneficiary if tender is withdrawn or the supplier declines to sign contract. The typical value of the Guarantee against the overall contract value is 2-5%.
Provides comfort to the buyer/beneficiary of repayment of advances if the supplier fails to perform in line with the agreed contract. Typically 10-40% of contract value.
Effectively performs the same function as Guarantees – normally a ‘back-up’ Guarantee of payment if buyer doesn’t pay for goods.
Can defer payment of customs and excise duties.
A Guarantee against failure to perform an agreed contract. Typically 10-20% of contract value.
Where it has been agreed that the buyer/beneficiary retains a portion of the payment for a certain period, the exporter will request its bank to issue a retention bond in favour of the buyer as security. This type of Guarantee protects the buyer from non-fulfilment of the contract terms. Typically 5-10% of contract value.
Provide security to the buyer/beneficiary that the goods or services supplied will perform as per the contract under the specified warranty terms. If they do not, the Guarantee can be called on by the beneficiary.