Maintaining bank guarantee facilities can tie up significant capital that could be better used across other areas of your business. Consider the potential for growth, investment, segment expansion or increased cash flow if you freed up your business assets.
There has been significant progress in the Surety market, this past year alone has seen;
- Insurer’s appetites for Surety broaden to include companies who previously may not have been eligible, such as those who have a sustained annual turnover from $20 million upwards.
- The emergence of ‘Single Bonds’ has opened up the market even further, offering a ‘no facility, no minimum company size’ prerequisite.
Surety bonds can be used to secure most types of contracts including;
- Advance payment
- Offsite materials
- Bid/tender bonds as well as commercial lease bonds.
A concern around Surety has been the issue of beneficiary acceptance, with bank guarantees being favored as the required form of security for a contract. Many Surety providers maintain a credit rating as strong as any of the major banks. This, along with a better understanding that Surety bonds are unconditional, just like a bank guarantee, and can be called on with a process no more onerous, has seen a major increase in Surety acceptance. For the small segment of the market that refuses to accept Surety bonds, facilities can include the ability for a Surety provider to arrange a bank guarantee. The bank guarantee is secured by a Surety bond, allowing the beneficiary to receive a bank guarantee without tying up capital.
To learn more about Surety Bonds or the other products and services available through Insurance House contact Brad Day on 03 9230 1224 or email firstname.lastname@example.org.
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