Handle Your Business With Minimum Risk With Bank Guarantee

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A bank guarantee can minimize the risk to your business when, for example, trading with customers, suppliers, or landlords. Here you can read more about when a bank guarantee is relevant, and you will find more information about the different types of guarantees that you can choose from.

A BG can be a good tool for your company if you need to minimize the risk when making agreements. When your company makes a contract with a customer, supplier, or landlord, a BG can thus be part of the agreement. The purpose of the warranty is to protect either party - or both - from loss.

Sometimes one party requires a BG to enter into the agreement at all. This often happens, for example, in commercial leases, where the landlord typically requires a BG for three to six months' rent payment.
A BG means that the bank assumes the risk on behalf of your company by guaranteeing the payment.

That is why we make a credit assessment, just like when we have to give loans and credit before we provide a banking instrument.

Why should a bank guarantee be provided and how could it help you?

The seller does not want to end up in a situation where the buyer suddenly cannot pay either the purchase price for a home or the goods that have been sent to the buyer. It is not a requirement that a banking instrument is provided, but it gives the seller a definitive guarantee that they will receive the agreed sum. Therefore, a banking instrument is also irrevocable, so the buyer has to fulfill the obligations set out in either a purchase agreement or another agreement entered into.

The advantage of a banking instrument is particularly evident in cases where the seller has to send a large consignment of goods to the buyer. The seller does not want a situation where they have sent goods for e.g. $ 200,000 without a guarantee that the buyer can pay. Should the buyer go bankrupt, it can be difficult for the seller to claim the money the buyer owes, without a bank guarantee. If, on the other hand, the buyer has provided a bank guarantee and they go bankrupt, then the seller still receives his payment.

That way you could minimize your risk while doing business with a banking instrument and avoid future losses.

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