An advanced payment guarantee APG is an assurance made by a surety made to a debtor or a customer that enables them to acquire goods. This might help your business tender for goods you previously you could not.
With a payment guarantee, you are not only assured of better terms of the contract but more chance to secure tenders as your customers will not only be sure of your supply but also sure to receive compensation in case you fail.
Advance payment guarantees are secured by successful bidders and issued to customers to assure them that the advance payment offered by the customer to the supplier is guaranteed to servicing the tender thus the term advance payment guarantee APG.
Advance payment guarantees APGs, moreover, helps you get money upfront from your customers during supply as they are sure of refund in case you do not supply. This also gives you the peace of mind knowing that you are not legally bound in case you fail to meet the contract standards as you will not have to face legal charges.
APGs are used when the suppliers require either full or part of the tender to be financed by the customer before the tender is supplied or shipped. The buyer, in this case, needs to be protected or assured that in case the suppliers fail to meet the agreed supply standards or does not supply the goods at all, the upfront costs will not be lost. This boosts the customers’ confidence in making the purchase as they are not afraid of losing the cash.
Advantages of advanced payment guarantee APGs
With advance payment guarantees you can bid for higher tenders that you could not have managed to service before. This expands your business horizons as a small or medium size business SME. Knowing that you can bid for more tenders also gives you more confidence to excel as a business as you do not have to limit your business to only the tenders you can service with your finances.
This gives you more possibilities to secure more tenders and service them in the long run. To get more tips on how to get the best tender for your business you can check out our complete guide with winning tips on how to secure a government tender. Click here to find out.
More funds, more control
When using an advance payment guarantee form a financier, you are not required to put your finances in any form of guarantee. This makes you have more funds to supply the required tender without constraints. Using APGs also means that you will most probably honor the agreement between you and the business thus the tender will be serviced.
At momentum credit, we take up to 30% upfront cash cover security and deposit in a trust account. We offer APGs within 24 hours ensuring you access them in time. There’s also no opening account and we do not take any collateral such as land title deeds thus making the whole process fast, easier and cheaper for your business.
At momentum credit we can also offer you a loan, this can facilitate the cash cover or an advance that might be up to 5,000,000.00 to begin servicing the tender on time. all these are geared to ensure that you free up your working capital to have more freedom and power to service the tender.
Being able to service for tenders with more customers and growing your opportunities will boost your business status both locally and internationally. This will increase your possibilities as a business and this will greatly boost your chances to secure more tenders in the future and thus grow your business as a whole.
Advance payment guarantees give customers the confidence that incases a supplier does not honor the tender agreement the upfront cost will be catered for by the financier. This boosts their confidence to do business with you as a business. This is a win-win situation for both the customer as they have security against any breaches and to you as a business as you get the chance to carry out business with them.
Circumstances under which APGs are not a great idea.
Although advanced payment guarantees are a solution to many business needs, there are occasions they are not a good option. Some of these include tenders in which they are not required and tenders that you can supply without their assistance. In case you are bidding for a tender that you may be able to service it is not a viable option to acquire an advance payment guarantee as you will increase the cost while minimizing your profit. Other tenders do not require APGs all the same.
Although in many circumstances you might require to free up your working capital as a business, choosing whether to use an advance payment guarantee depends whether the tender requires it and also your need as a business. If you need to get started you can get an Advance payment Guarantee.