Manufacturing industry

Guarantees for the manufacturing industry

A great deal of the production involved in industrial and engineering projects takes place in the supplier’s factory. During the production phase the supplier is faced with considerable costs for purchase of material. Therefore, when an order is placed, it is common practice for the supplier to receive an advance payment of 10-30 percent of the total value of the order.

As security for this, a client will often ask for collateral in the form of an advance payment bond. This ensures that he or she will get his or her money back if the supplier cannot fulfil the specified obligations. If the order calls for the installation of the product, the client can also ask for a performance bond.

This compensates for costs incurred if, for example, the supplier becomes insolvent before the installation is completed. A maintenance bond can, in turn, compensate for additional costs incurred during the guarantee period, which sometimes follows delivery and installation of the product.

Here you can read more about the most common guarantees in engineering and industry:

Advanced Payment bond
Performancebond II
Rental bonds
Bid bonds