Regardless of the quality of your business and its financial situation, customers are increasingly demanding financial guarantee before closing a deal. Especially with complex international projects. In this article, you can find out how surety bonds and guarantees from insurers can help you with this.
Why need a guarantee?
Can your business meet its contractual obligations? Will you be able to deliver as agreed? Not only tomorrow, but also if the project takes longer? Failing suppliers burden customers with delays and financial setbacks. Customers want to limit this risk as much as possible. The need for security is particularly great in the case of large international projects.
How can you offer security to your client?
How can you offer this extra security to your customers? Traditionally, bank guarantees have been used for this purpose. Surety bonds and guarantees from insurers are less known. This solution offers significant competitive advantages.
Similar to a bank guarantee, a guarantee from an insurer provides your customer with appropriate financial compensation if your business fails to meet its contractual obligations. These types of guarantees are becoming more and more mandatory. Especially for complex projects in the construction, engineering and transport sectors.
What are the advantages of surety bonds and guarantees from insurers?
By choosing not to knock on your bank's door for such a guarantee, your existing bank lines of credit are not called upon. The cash needed for your working capital therefore remains intact.
Insurers take on more risk than banks. Risk management is in the DNA of insurance companies. While banks require material guarantees (a mortgage, cash reserves, etc.), insurers often offer more latitude to post a surety bond or a guarantee. For long-term projects, banks generally do not issue guarantees beyond five years. Insurers offer longer-term guarantees.
When doing international business, it is important to be familiar with local customs and regulations. Working with a partner who understands local customs and regulations is invaluable. Especially when it comes to surety bonds and guarantees. An insurer like Allianz Trade has knowledge of the global market and has surety teams all around the world (230 surety experts). They can be an excellent support for your international growth.
Guarantees for commercial projects
With our guarantees, you win that big contract or expand your business into new markets.
Guarantees for construction & installation
Guarantees for export and trade
We tailor guarantees that comply with local laws and regulations to support your business.
