Bank guarantee is a form of security, in which the Bank acts upon your order, assuming an obligation to your counterparty (beneficiary of the guarantee) to pay a specific amount when your company defaults on its obligations. The guarantee stipulates the type and scope of the obligation and the terms and conditions that have to be fulfilled for the drawing on the guarantee. The product is also available within the line for bank guarantees and multi-product line.
This service is available online at the Trade finance module in the Millenet internet banking system.
Benefits for your company:
- You may negotiate better conditions for your trade agreement (for instance, deferred payment term, discount).
- You avoid commitment of your funds if the guarantee is an alternative form of collateral acceptable by the beneficiary (for instance, bid bond guarantee instead of bid security).
Benefits for the beneficiary:
- He may use effective instrument for enforcement of receivables without additional costs and delay.
- Secures himself against the risk of:
- Customer's insolvency or against refusal to pay,
- Customer's resignation from transaction and refusal to accept goods.
- He is sure to receive payment or recompense if the Customer defaults on the agreement.
- It is easier for the beneficiary to sell a receivable secured with guarantee.