Bank Guarantee for advance payment -What options available to SMEs?

Question

In addition to UK’s export credit agency -UK Export Finance (UKEF), what are the other avenues that SMEs can use to obtain a Bank Guarantee for Advance Payment?

We won a tender recently to provide consultancy services overseas and need to secure a Bank Guarantee for Advance payment to send to the Client. I’ve been told about UK Export Finance, but would like to find out from other SMEs about other facilities they may have used to obtain this.

With thanks.
Veronica

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Answer

The guarantee would be needed by the bank of the the payer (your client) not you.

Hope this helps

David

Answer

David, thank you for the reply.

This request is more the reverse of what you suggested. In this case, the client requires us to have a Bank Guarantee that any payments they make in advance of our company delivering the service will be returned by the bank in the unlikely event we do not deliver the service.

I don’t know if you have come across this before, but I understand it can be a condition of some Aid Funded projects for which consultancy services are provided, rather than goods supplied.

Regards.
Veronica

Answer

Hi Veronica
Most banks should offer what they call an escrow service. e.g Your bank receives the funds from your customer & holds them in an "escrow "account which neither you or the payer can access until you meet or do not meet predetermined conditions. i.e delivery of the goods etc. The bank should be able to help draw up the escrow conditions.

Hope this helps

David

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