Bank guarantee — an instrument to ensure that the client (the principal in the guarantee) meets his obligations towards the counterparty (beneficiary in the guarantee). If the beneficiary provides the bank with a formal payment request, in line with the conditions laid out in the guarantee, attesting to the breach of contract by the client, the bank will pay out under the guarantee.
A guarantee is useful for:
- companies to participate in tenders, central procurement biddings, including those of public authorities in the ProZorro system;
- sellers of goods/services – to secure obligations for the timely delivery of goods/services under the terms of the underlying contract;
- buyers of goods/services – as a way to have the payment obligations guaranteed for the counterparty and to get the option to defer payment (trade credit) in the contract, allowing better use of working capital;
- sellers of goods/services if advance payment is required for an order – to guarantee the return of the advance payment to the buyer in case the contractual obligations to deliver the goods are not met;
- tour operators and travel agents to obtain required licenses and to guarantee performance of their obligations vis a vis clients.
Advantages of bank guarantees from Pivdenny Bank:
- The possibility to obtain trade credit from counterparties (deferred payment).
- Ensure proper performance of the contractual obligations by the counterparty.
- Confirmation by a large and reputable bank that your company will meet its contractual obligations.
- Ability to ensure that contractual obligations are met without advance payment.
- Bank guarantees are a much less costly tool (compared to lending or factoring).
- Professional staff – our trade finance experts will help you structure a deal with your counterparty to reflect all the required parameters of the bank guarantee in a timely fashion.
- Possibility to get a guarantee from a first-class European bank against a counter guarantee from Pivdenny Bank.