An Advance Payment Bond is a type of bond that protects the beneficiary by guaranteeing upfront payments for goods or services needed under the contract following, either insolvency or, the misuse of funds.
It is usually put in place for the full amount of the payment. The bond reduces on milestones agreed, certified and invoiced.
An Advance Payment Bond enables the contractor to procure goods and services in advance of their delivery, without impacting their cash flow.
It guarantees to compensate the beneficiary in the event of the contractor failing to deliver pre-paid goods and services under contract.
They are typically required by contractors operating in the following industry sectors:
Whilst no means exhaustive, here are the main items you will need:
As a Specialist Surety Services Provider, DRS specialise in the arrangement of Advance Payment Bonds. We have an approved list of investment grade sureties (typically “A-” Standard & Poor’s or higher) to meet the requirements of Bond beneficiaries.