By offering more certainty, the supplier strengthens their trading position.
The buyer receives the certainty that the contract will be executed within the set period and in accordance with the terms of the contract.
Relationship of trust
When doing business internationally, it’s important to gain the trust of your future trading partner.
Good execution guarantee
A commercial contract creates uncertainty for the buyer: Will the agreed term be respected? Is the result all that was expected? With a performance bond, which offers a guarantee to the buyer/principal (beneficiary of the guarantee), those concerns are a thing of the past. In the event of non-performance or incorrect performance, the ‘proceeds’ of the calling of the performance bond will enable the buyer/principal to entrust completion of the contract to a third party.
What is the term?
From the moment of the deposit (in other words, from the effective date of the contract) until the maturity date, usually coinciding with the completion of the deliveries/performance as set out in the commercial contract, but often only after additional confirmation of release by the beneficiary.
Extensions may be required or demanded if the delivery/performance schedule is adjusted in mutual agreement between the supplier and that the buyer/principal.
The buyer receives a guarantee that the works will be carried out in accordance with the terms of the contract. This certainty enables both parties to conclude a contract rapidly.
Don’t hesitate to contact your KBC relationship manager for more information.