Bank guarantees offer certainty
Give your supplier the certainty that you will meet your financial obligations by using a bank guarantee. A bank guarantees it will pay the supplier the amount owed if you do not fulfil your financial obligation.
A bank guarantee makes you an attractive trading partner and can give you certain advantages. For example, you might not have to pay a deposit, you pay a lower rate, or you are given a payment extension.
Costs and types of bank guarantees
Banks charge costs when applying for, changing and claiming a bank guarantee. A commission is also calculated on the guaranteed amount during the term. Fees are can be charged for extra services, such as urgent processing. An advantage of a bank guarantee is that it is cheaper than credit.
Depending on the purpose, there are different types of bank guarantees:
- Prepayment guarantees
- Payment guarantees
- Maintenance guarantees
- Bid guarantees
- Rental guarantees
- Performance guarantees
- Customs guarantees
The bank minimises its risk by blocking an amount equal to the bank guarantee on your bank account. Or by deducting the amount from your credit limit.