Bank guarantees

The bank guarantee on first demand is granted by the bank of your client. It is simple and very effective to protect your business against unpaid as far as the guarantor (the bank) is creditworthy.

In case of unpaid, the bank is obliged to pay you at receipt of a registered mail from you.

The bank guarantee allows you to give a "normal" payment term to your customer while being assured of the payment.

The cost depends on the bank and the risk estimation that the bank will do. It is generally calculated with a rate around 1% per year.

The bank guarantee on demand

The bank guarantee for the domestic trade and the letter of credit stand by for the international trade are particularly suitable in the context of regular orders received with the same client. Beware of restrictive covenants used by some banks which degrade the level of guarantee.

The endorsed bill of exchange

The bill of exchange endorsement makes sure that you will get the payment on your invoice due date. Unlike the bank guarantee which is disconnected from the means of payment, the bank's commitment relates specifically to the bill of exchange.

This solution is less flexible than the bank guarantee because you have to repeat the request for approval for each bill of exchange. However, it is possible to discount the bill of exchange which can be very good for your cash.

The endorsed check

The endorsed check is similar to the endorsed bill of exchange except that the check is a cash payment mean. You have legally around 8 days (it depends on the country to cash a check in the bank) which limits its relevance compare to the endorsed bill of exchange which can be discounted.

The bank check

It differs from conventional check because the check is issued on behalf of the bank itself. The assurance of being paid is total and similar to the endorsed check. However, beware to bank check falsifications which are very common.